Can You Really Make Money With Forex? Read The Article And Apply What You Read
So, you have been reading a lot about forex lately and how the market works in general; now is the time to understand how investors make money with forex. Foreign Exchange or forex is likened to the conventional stock trade; however, in this case, the medium is the exchange of one currency to the other. You make money with forex if the value goes up. Because of this, people who have prior experiences in handling financial transactions won’t have a difficult time understanding how forex works.
Making money with forex
Basically, what we are going to do is to exchange our money (the investment portion) into a foreign exchange market with high hopes that the exchanged currency rises against what we’re having presently. For us to understand this portion better, we could use a little help by pairing GBP (pound) / USD (dollars).
In our example, we’re going to start with 100,000 units of GBP/USD. In our analysis, we expect that the GBP will strengthen against the USD, and so we buy another lot at 50:1 for a price of $1.60. This means 100,000 units multiply by $1.60 equals to $160,000 of the Pound; putting $3,200 at risk (your investment) and the other $156,200 through leverage (investing through borrowed money). In return, our forex broker will be moving worth $160,000 from a U.S. Account to a Pound Account.
A few hours have passed, your intuitions were correct, and the GBP has indeed beef up against the USD by 50 points or pips. The original quote of $1.60 is now $1.6050 and the 100,000 units have become $160,500 from the original $160,000. This means our $3,200 investment has earned us $500 in just a couple of hours. You gained $500, which is about 15% of your investment – not bad at all.
Is it really that easy to make money with forex?
In general, making money in forex is not that difficult as long as you know where you are heading to. You will need to know the exact directions where the pair would likely go. Making money in forex is not the real issue but figuring out how to make the money.
You also need to have the right resources, abilities and knowledge in forex before you can even start earning money. Forex is the reason why countless men and women have quit their daytime jobs, focus all their efforts and became considerably wealthy people. Even so, currency trading carries its own risks, which can be minimized by knowing the right strategies and methods to evade the danger and maximize the earnings.
Keep in mind that there are no guarantees in forex. Don’t get too overly excited or you may be losing money than earning it. Understand the basics of investing, invest on smaller quantities and deal only with uncomplicated trades. You can make money with forex and at the same time learning the ins and outs.
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