How To Make Money With Forex, Trading Currencies.

The placement forex of a trade in the foreign exchange market is simple. The mechanics of a trade are very similar to other financial markets (such as the stock market), so if you have some experience in trading, you should be able to do it quickly.

The objective of currency trading is to exchange one currency for another with the expectation that the price will change; more specifically, the amount of money you bought will increase compared to the amount you sold.

* EUR 10,000 x 1.18 = US $ 11,800
** EUR 10,000 x 1.25 = US $ 12,500

An exchange rate is simply the ratio of a valued currency to another currency.

For example, the USD/CHF exchange rate indicates how many US dollars can buy one Swiss franc, or how many Swiss francs you need to buy one US dollar.

How to read a Forex quote.

Currencies are always quoted in pairs, such as GBP / USD or USD / JPY. The reason why they are quoted in pairs is because, in every currency exchange transaction, they are always quoted in pairs. currency foreign, you are simultaneously buying one currency and selling another one .

This is an example of a foreign exchange rate for the British pound against the U.S. dollar:

The first currency listed to the left of the slash ("/") is known as the base currency (in this example, the pound sterling), while the second one on the right is called the currency of quotation or quotation (in this example, the U.S. dollar).

When you buy, the exchange rate tells you how much you have to pay in units of the quoted currency to buy ONE unit of the base currency . In the example above, you have to pay 1.51258 US dollars to buy 1 pound sterling.

n selling, the exchange rate tells you how many units of the quoted currency you get when you sell ONE unit of the base currency .

In the example above, you will receive US$1.51258 when you sell 1 pound sterling.

The base currency is the "basis" for buying or selling.

If you buy EUR/USD, this simply means that you are buying the base currency and simultaneously selling the quote currency.

In caveman talk, "buy EUR, sell USD".

• You I would buy the pair if you believe that the base currency will appreciate (gain value) relative to the quote currency.
• You would sell the pair if you believe that the base currency will depreciate (lose value) relative to the quote currency.

The offer, inquiry and diffusion

All currency quotations are quoted with two prices: the offer y ask .

In general, the offer is lower than order price.

The offer is the price at which your agent is willing to buy the base currency in exchange for the quoted currency.

This means that the offer is the best available price at which you (the trader) will sell in the market.

If you want to sell something, the broker will buy it from you at the bid price.

The ask is the price at which your broker will sell the base currency in exchange for the quoted currency.

Here is an illustration that brings together everything we have covered in this lesson:

This means that the selling price is the best available price at which you will buy in the market.

Another word to ask is the offer price.

If you want to buy something, the broker will sell (or offer) it to you at the sale price.

The difference between the bid and the asking price is known as the SPREAD .

In the EUR/USD quote above, the bid price is 1.34568 and the ask price is 1.34588. See how this broker makes it easy for you to exchange your money.

• If you wish to sell EUR, click on "Sell" and you will sell EUR at 1.34568.
• If you wish to buy EUR, click on "Buy" and you will buy EUR at 1.34588.