Forex Trading for Beginners
Forex is your Window to the Future!
Humanity’s most cherished dream is to increase its capital. Everybody knows the most valuable asset is money, and everybody knows that money can and should be used to make more money, but few know how to go about doing this.
The modern world long ago offered a solution to this problem: trading money for profit. A basic form of this method can be observed at currency exchange points. Exchange agencies successfully buy currencies at one price and sell them at another. We do exactly the same thing, but in a more regulated manner and with greater amounts by trading with computers on the Internet.
We address those that want to change their lives for the better and are searching for new ways of making money.
One of the results of scientific and technical progress in the financial sphere is that today, any person with access to a personal computer or a properly set up mobile phone can, with hardly more than one click, make a deal on any financial or commodities markets in the world. This is why, over the last few years, millions of people across the modern world have profited from these systems, through a concept that in the past seemed totally fantastic and impossible: an opportunity to become a full fledged member of the stock market and to make money on stock operations, which can be more profitable than any other activity. Many people have gone on from this sort of trading to become professionals on various stock exchanges.
The most promising and profitable market, accessible to millions of people, irrespective of their education, language, gender, and age, is undoubtedly the Forex market, named such from the English: FOReign EXchange market. The Forex market is a worldwide currency market whose major function is the exchange of one currency for another at a free market rate determined by the balance of supply and demand at any given time.
How can I Earn Money on this Market?
Market players, traders, connect through brokerage companies. A broker offers a trader special computer software – the so-called trade terminal. It allows a trader to obtain information on the constantly changing rates of the world currencies, to perform deals (buys or sells) on a given currency, and to monitor the status of the trading account round the clock. Transactions on the Forex market are made by indicating the sum in a certain currency, a number usually divisible by 100,000. For example, with only 1,000 dollars you can make a buy-and-sell transaction for a sum of 100,000 dollars (the missing sum will be provided by your broker as leverage). Let’s suppose that you bought 100,000 dollars of Swiss francs at a price of 1.2450 franc/dollar. In a few hours the rate goes up to 1.2500 and you sell the $100,000. You just sold francs at a higher price, which means that you have made a profit. How much? There is a very simple formula:
Profit = (Sell Price – Buy Price) x Deal Amount
In our case the sell price was 1.2500, the buy price – 1.2450, the deal amount – 100,000. We get: (1.2500 – 1.2450) х 100,000 = 500 Swiss francs
Or, in dollars, the profit = 500 / 1.2500 = $400.
Thus, with only $1,000 (and not $100,000) on your account, in just a couple of hours you earned $400, a return of 40%.
The major advantage of the Forex market is the chance to make profitable operations regardless of whether the market is going up or down. It is possible to earn money by selling when prices are going up and selling when prices are going down. In the first case we try to buy for less and sell for more; in the second case we sell for more and buy for less.
Let’s identify some other important advantages of the Forex market in comparison to other securities or commodities markets:
- First, the volume of this market greatly exceeds the volume of other markets. The daily trade volume at the Forex market is about 3-4 trillion dollars, far higher than the volume of the securities market. That is why the Forex market is the most liquid (or “most sellable”) of all markets, giving the trader the freedom to sell or buy contracts of practically any amount at the current market price.
- Second, the Forex market is always accessible: it works 24 hours a day and runs all week.
- Third, the Forex market is extremely stable: unlike the securities market, on the Forex market the fall of one currency means the rise of another one and, as mentioned earlier, it is possible to earn at both falling and rising prices.
- Fourth, Forex deals are highly profitable at very low cost.
High profits are possible through a mechanism called “leverage dealing” which allows making deals without having the entire sum of the contract; all you need is to deposit a small amount that is but a tiny percentage of the actual sum of the contract. The low cost is preconditioned by the fact that the Forex market traditionally does not have any commissions apart from the difference between the sell and buy price – the so-called spread set by a brokerage company for a trader. However, all these positive features that make the Forex market so attractive do not guarantee successful trading. It is important to note that there are specific methods for market analysis can greatly enhance the chances of making profitable deals, and one should learn to use these methods. The ultimate guarantee for success on the Forex market is your desire to achieve a set target and some persistence.