Saturday, July 4, 2009

How To Make Money Trading Forex

Buying and selling in the forex market is like buying or selling stocks, bonds and commodities market. The only difference is that currencies are traded in pairs, while on the other hand individual scrips and commodities are traded in the stock and commodity markets. Traders who are experienced in trading in other markets can still easily understand Forex markets. Novice traders may face a little difficulty in the beginning, but with a little investment of time, they can easily understand the forex market.
Leverage and cost are the beauty of Forex trading, which gives an additional edge to the Forex market as compared to equity and other markets. The most important thing for trading in Forex is to understand Forex quotes and be able to calculate profit and loss. Examples can be a good way to understand currency pips and trade 'balances'. In Forex market, the key is to compare one currency to another and to think about whether the price will fluctuate in favor of the trader or not. Let's understand this with the help of an example.
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Example of Stock and commodities:-
In this example, a trader bought 100 shares of Microsoft at $20 and sold the stock in the next month at the rate of $22, which means that the trader made the profit of $200 at the end of the trade.
In the next example, the trader bought Gold for $930 and after a week sold it for $940, for the gain of $10, making a profit of $1000 on the trade.

2 comments:

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