HOW TO EARN IN FOREX?

HOW TO EARN IN FOREX?

Forex, where the commodity to the traded is currency and not shares and stocks, is a trading market which gives its investors, returns in the form of the relative value of one currency exchanges against another. Forex trading is therefore , always dealt in currency pairs wit the major currency pairs being EURO/US dollars (EUR/USD) and US Dollar / Japenese Yen (USD/JPY), to name a few.

And it is with concurrent buying and selling of currencies that the trader hopes to make a profit on favourable exchange rates fluctuations. Exchange rates are always fluctuating, going down as well as up, within seconds and the whole art of trading lies in perfectly foreseeing the trend of the variation between two currencies.



BUT HOW TO MAKE MONEY IN SUCH A COMPETATIVE AND INCESSANR TRADE MARKET?


Well hers an example to illustrate hw....


Supposing the current bis/ask price for EUR/USD is going by the rate of 1.5027/30 giving you the option to buy 1 euro with 1.5030 US dollars or sell 1 Euro for 1.5027 US dollars. Now, if feel that the Euro is underrated against the US dolars, you would opt on buying Euros, selling your dollars at the same time. So you buy 100,000 Euros by paying 150,300 dollars. You can then start analyzing the market, waiting for the exchange rate to rise.


Change and fluctuation in the market is quiet frequent and rapid, especially in the Forex market, where these recurrent changes are also influenced by various other world events and factors like oil prces, interest rates and economical conditions. But with all these changes the main aim of all the investors remain the same is making profits.

FOREX GLOSSARY

• APPRECIATION: A currency is said to appreciate when it strengthens in price in response to market demand
• ARBITRAGE : The purchase or sale an instrument and simultaneous taking of an equal and opposite position in a related market, in order to take advantage of small price differentials between markets.
• AROUND : Dealer jargon used in quoting when the forward premium/discount is near parity.
  
• ASK RATE : The rate at which a financial instrument is offered for sale (as in bid/ask spread)
• ASSET ALLOCATION : Investment practice that divides funds among different markets to acheive diversification for risk management purposes and/or expected returns consistent with an investors objectives
• BACK OFFICE : The departments and processes related to the settlement of financial transactions
• BALANCE OF TRADE : The value of country's exports minus its imports.