How does Forex trading works?


How does Forex trading works?

In Forex, you buy or sell currencies. 

To make money from the currency that we trade, we will wait for some time for the exchange rate to change in values. If you buy a currency, you are expecting the exchange rate to increase and if you sell a currency, you are anticipating that the exchange rate will decrease in value in a period of time before you exchange back the original currency that you have.

For example, you bought 1000 Euros at the current exchange rate of EURUSD = 1.12800, after 5 days you exchange your 1000 Euros back into USD at an exchange rate of 1.13500.

1000 Euro x (1.128000) = 1,128 USD (Dollar used to bought Euros)

1000 Euro x (1.135000) = 1,135 USD (Dollar gained after selling back the Euros)

You earn a profit of 7USD in just 5 days! Isn't it great? 🤑

You’ll earn more if you buy more Euros in a short period of time. 

But take note: If the exchange rates declined, you’ll lose your money depending on how much the exchange rates move against you! 😭

That's why you should know your position as a trader, you must know whether you are a buyer or a seller. Where will you stand? Are you a seller or a buyer?