Gaining Vs. Losing, Forex Trading Style

By Damon Nelson

In almost every country worldwide, you will probably see this huge market that is open 24 hours a day and seven days a week. The market that I am referring to is the Forex market. In here, you wouldn't be able to find the similar services, products and commodities that your local market offers. Instead, you'll find traders that are busy trading different currencies. Every trade that takes place in the Forex market involves two difference currencies. For instance, you want to buy US dollars using your Japanese Yen. Or, you would like to sell your Canadian dollars in exchange of Euros. The exchange rates and the value of currencies fluctuates everyday. In effect, traders should monitor these trends to determine the price of a certain currency.

In one day, a certain currency can change its value for a number of times without prior notice or warning. Hence, it is very vital to keep track of the trends. Political events and economic changes are huge contributors to the movement of the Forex market. To help you determine if you are losing or gaining in Forex trading, this article will be discussing important points you have to take nate of.

The Forex investment is greatly affected by the exchange rate and in order to understand the relationship between the two, you should also be familiar with Forex quotes. Like the currency pairs, Forex quotes can be found in pairs as well. Here is a very good example:

1.Suppose the currency pair is USD (US dollar) and CAD (Canadian dollar)

The Forex quote for this pair is USD/CAD=170.50; this is interpreted as 'every one US dollar is equivalent to 170.50 CAD. The currency found at the left side is known as the base currency and it is always equivalent to 1. The currency found at the right side is called counter currency. The stronger currency is always the base currency and in this case, the USD. The Forex quote's central currency is USD and so you can find it in most Forex quotes.

Wondering how you can determine if you are reeling in profits or losing your money?

2.This time use EUR to USD. Assuming that the Forex rate is 1.0857; in this example, the USD is the weaker currency. If you bought 1,000 Euros, you will need to pay $1,085.70. After a year, the Forex rate was at 1.2083 and this means that the Euro's value increased. If you decide to sell the 1,000 Euros now, you will get $1,208.30; now, in this transaction, you gained $122.60. What if the Forex rate a year after was 1.0576? This means that the Euro's value weakened. If you still decide to sell the 1,000 Euros, you will only receive $1,057.60 which means that you lost $28.10; did you get it?

Similar to mutual funds and stock, a lot of risks are involved in Forex trading. This is due to the fluctuating trends in the exchange market. Government bonds have low level risks but the returns that you could earn are much smaller. For you to rake-in higher returns, invest in Forex trading. However, you must be ready to face the consequences of its risks.

Set short and long term financial goals. In doing this you can minimize the risks involved in your financial security. Also, it will enable you to trade with confidence and comfort. Feel free to utilize available training tools. These aids can help you make wise and effective decisions. Now, you can check if you are gaining profits from Forex or not. - 23223

About the Author:

Make money from money, this is the sole purpose of Fap Turbo. Visit Damon Nelson's site to watch 30-second product reviews at FastVideoReview.com.