Setting up a forex money trading business is daunting. It looks hard to do as well. Don’t let up, however, because if you know how to play, it’s crazy profitable.
Forex trading is scalable and as is a 24/7 market, making it a secure financial source to get into when you need one.
The problem most people have with trading forex is making it worth their while. Is there a way to make a big chunk of cash from currency trading?
The answer is yes, and we’re here to teach you how to do that. If you want to know how to trade forex and make some cold hard cash from it, keep reading. You’re about to find out.
1. Do Your Homework on Currency Trading:
If you plan on profiting much money on your currencies, here’s the thing. You need to make sure you understand your terms and types of trades. If you want to make money trading currency, you need to know the terms.
Do you know what pairs are? How about speculative risk? Have you heard about base and quote currencies?
Learn as much as you can about foreign exchange. Know the markets you want to handle and their geopolitical situation. Understand their current economic factors.
Learn the market conditions within your trading sphere, world events and screening of investments. Where you can, make sure to consider when you should hold onto your currencies and when to trade them on the get-go.
If you want to learn with a complete online trading course, there are a few options available online.
2. Make Money Trading Currencies Through Buy and Sell:
Here’s the secret to making money trading currencies.
In every trade, transactions list as pairs. Each pair has something called a base currency and quotes currency. If you have an EUR/USD pair, the first currency, EUR, is the base and the second currency, USD, is the quote.
The goal of currency trading is trading in your base currency for as high an amount of quote currency as possible. Trading this in depends on a few values, at most you want to cash out with a higher quote value every time.
For example, let’s say you’re trading at 1 EUR at 1.13 USD. You want to you buy your EUR 10000 with $11,300.
After two to three weeks, check the market. Let’s say the currency trading is at 1 EUR to 1.25 USD. Sell those EUR 10000 back to get $12,500, making a net profit of $1,200.
We know money does not fluctuate as much, but that’s a general idea. The need to understand trading forex comes from your ability to predict trends, upticks and downticks in the exchange rates.
3. Knowing Long and Short:
Know when to go long and when to go short. Going long means buying the base currency and selling the quote currency.
When buying, make sure to buy only when the base is at a low. You then go and trade in the money and sell it once the prices go up for the currency.
If you want to go short, this means you want to sell your base currency and buy the quote. In this scenario, you want to get the base currency for as low a value as possible. You can then buy back the base currency at a lower price.
4. Know Your Trading Forex Quotes:
Much like how your betting sites work, you need to know quote prices if you want to make money trading currencies. Each quote has a bid and an asking price. Bids will always go lower than the asking.
The bid is the amount that your broker is willing to buy your base currency in exchange for the listed quote currency. This means all bid types are your best available price to sell.
The ask is the price your broker will sell the base currency for your quote currency. This is the offer price.
The difference between the bid and ask price is the spread. Its value goes at around a few “pips” difference, which means a small percentage.
5. When To Buy and Sell Your Pairs:
Whenever you’re trading currency, the operative way to buy and sell is to predict a country’s economic condition to see whether you’ll buy or sell.
For example, in a USD/JPY pair, if you think Japan is going to weaken the Yen, it’s good to start a buy USD/JPY order. You’re predicting the USD will have more value against the JPY, so you’re buying and holding onto your dollars.
Once you think that USD will start to fall while the Yen is about to get stronger, start a sell order. Sell your USD for the stronger JPY and pocket the difference.
6. Understanding Margin Trading:
If you want to get to make money trading currencies, it’s smart to trade by margins. If you buy something, you never buy a single unit of it. The single unit value won’t be worth it.
Forex money comes in lot trades. You can sell:
- micro lots at 1000 units
- mini lots at 10,000 units
- standard lots at 100,000 units
You might here yourself saying you don’t have that much money. 100,000 units of one currency is a lot. Margin trading solves that for you.
In margin trading, you’re allowed big trading positions for a small amount of money. It works by having a broker let you borrow capital for use in currency trading.
If you get EUR 100,000 at $ 1.25 and a margin requirement of 3%, you can control a standard lot of 100,000 units at $125,000 in value. You then set aside $3750 of your own money to trade for the 100,000 units.
Let’s say if your quote value goes at EUR 1/USD 1.25800, you can sell the 100,000 units for $125,800. This nets you a solid $800.
Once you decide that you want to close the lot, you can get back the $3750 deposit.
Want To Learn More on How To Trade Forex?
Making money trading currency is not hard. It requires a bit of your knowledge, foresight and ability to read trends. You can do all this with enough diligence.
Want to learn more on how to trade forex? Need more info on world events to decide on your forex money?
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