How to Trade Forex and Make Money

The Forex market is a lucrative source of income for many Forex traders. except that, learning how to do Forex trading can be an exciting and eye opening venture to many on the possible of the Forex trade market. To put it into perspective, the global Forex market trades approximately 4 trillion dollars per day. It is an easy and simple course of action to learn how to maneuver the activity and afterward make profits or money out of the venture. And as the popular cliché goes ‘you have to use money to make money’. Forex trading is basically the trading of money. consequently, to get started, you have to invest some capital in the venture. Trading Forex is a speculative activity whereby as a trader, you are speculating that the value of the money (money) you bought will increase compared to the base money.

Before you venture into Forex trading, it is vital to familiarize yourself with the basic Forex terms. The base money is the money you are selling while the quote money is the money you are buying. For example, in a money quote or list of EUR/USD, the EUR is the base money while the Dollar is the quoted money. Then there is the bid price which represents the optimum price to sell your money. It is also the price at which the Forex trade brokers are willing to buy the base money for the quote money. Ask price however is the optimum price at which you are willing to buy money. Or, it is the best price at which the broker is willing to sell the base money for the quote money.

The base money is taken to be 1 unit in the money quotes. An investor can make money in Forex trade by either the quoted money increasing in value or the base money decreasing in value. For example, if the Euro/USD quote increases from $ 1.1451 to 1. 1461 on a $100,000 lot, the investor will make money amounting to $ 100,000 (1.1460-1.1450).

After 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. Nearly all Forex accounts have a practice or demo account. The demo account will help you to know the different aspects of trading Forex. Next, since Forex trading is betting on currencies, study the market first. Analyze for example the political ecosystem of the currencies. Also, start small.

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