How can you profit from Forex trading?


How can you profit from Forex trading?


Forex trading, the forex market is the market that is unique in buying and selling currencies. The position of trade in the foreign exchange market is simple: trading mechanisms are very similar to those practiced in other financial markets (such as the stock market), and that if you have the slightest experience in trading a market that achieves revenues in This market.


The subject of Forex trading is the exchange of one currency for another, following that the price will change, and therefore the purchase of the currency will increase in value compared to the other, which is in a state of sale.


How is the pair read in the Forex currency market?


Currencies in the Forex market are always in pairs such as the euro/dollar or the pound/dollar.


The reason is that it came in the form of a pair because it is natural that at the exchange rate, you buy one currency and sell the other for that in the pair. When you buy the euro, in the example of the euro/dollar, you buy the euro and sell the dollar, and so on in the rest of the pairs.


For more clarity, here is an example in the pound / US dollar pair

GBP / USD = 1.7500 GBP / USD 1.7500

The currency listed on the left is known as the base currency (in this example the British pound), and the second currency is called the counter currency or the quote currency (in this example the US dollar).


When buying, the exchange rate tells you how much you want to pay in units of the quote currency to buy one unit of the base currency. In the current example, you would pay 1.7500 US dollars to buy 1 British pound.


When selling, the exchange rate tells you how many units of the counter currency you are to sell one unit of the base currency. In the current example, you will get 1.7500 dollars when you sell 1 British pound.


First: You must specify your desire to buy or sell

If you want to buy, then you are buying the base currency in the hope that its price will rise in the future, and then you sell it against the counter currency at a higher price. This process is called "long position". Just remember that long = buy.


If you want to sell, then you want to sell the base currency in the hope that its price will decrease in the future and buy the corresponding currency at a lower price. This process is called "short position". Just remember that Short = sell, Bid / Ask spread.


All forex operations are two-way quotes (Bid and Ask) (BID / ASK). Usually, the bid price is always lower than the AHE ASK price.


The bid is the price at which the dealer is willing to buy the base currency for the counter currency.


AHE ASK: is the price at which the trader sells the base currency for the counter currency.

The difference between the sale price and the purchase price is the so-called spread, which is usually the brokerage firm's commission.


If you believe that the economy of the United States of America continues to weaken, then this is bad for the dollar, and then you will carry out buying the EUR / USD. With the expectation and follow-up that its price will rise against the US dollar.


If you believe that the US economy is strong and the euro will weaken against the US dollar then you will implement the EUR / USD price selling. With the expectation and follow-up that the euro will decline against the US dollar.

walid
كاتب المقالة
writer and blogger, founder of alaa5 .

جديد قسم :

Post a Comment