How To Trade Forex And Make Money

The Forex market is a lucrative source of income for many Forex traders. In addition, learning Forex trading can be an exciting and eye-opening initiative for many about the potential of the Forex trade market. To put it bluntly, the global forex market trades around 4 4 trillion a day. It is a simple and straightforward process to learn how to run an activity and then make a profit from the initiative. And as the popular clich ‘‘you have to use money to make money’. Forex trading is basically currency trading. Thus, to get started, you need to invest some capital in the venture. Trading Forex is a speculative activity where as a trader, you are predicting that the value of the money (currency) you buy will increase compared to the base currency.

Before you start trading Forex, it is important to familiarize yourself with the basic Forex Terms. Base currency is the currency you are selling while quote currency is the currency you are buying. For example, in the EUR / USD currency quote or list, the EUR is the base currency where the dollar is the quoted currency. Then there is the bid price which represents the best price to sell your currency. This is also the price at which forex trade brokers are willing to buy base currency for quote currency. On the other hand asking the price is the best price where you are willing to buy the coin. Or, it is the best price where the broker is willing to sell the base currency for the quote currency.

The base currency in the currency quote is taken as 1 unit. An investor can make money in Forex trading either by increasing the value of the currency quoted or by depreciating the base currency. For example, if the EUR / USD quote increases from 14 1.1451 to 14 1.1461 per ,000 100,000 lot, the investor will earn $ 100,000 (1.1460-1.1450).

Following these basics, the trader will open an online Forex brokerage account. There are many brokerage firms in the industry to choose from. Before going live, it is advisable to use a practice account. Almost all forex accounts have a practice or demo account. Demo account will help you to know different aspects of forex trading. Next, since bets are placed on Forex trading currencies, study the market first. Analyze the political environment of currency for example. Also, start small.