In the spot market you are trading cash for cash at the current market price.
The forex is the largest, fastest-growing financial marketplace in the world. Every trading day the forex market handles a transaction volume of nearly $3.2 trillion, according to a survey done by the Triennial Central Bank in 2007. To put that figure in perspective, the average daily volume on the forex market is nearly 20 times larger than on the New York Stock Exchange.
The need for foreign exchange is driven by travelers, multinational corporations, and governments. Tourists from the United States need euros for their European vacations; corporations such as Microsoft exchange profits made overseas into U.S. dollars. Government hold reserve currencies and manipulate the money supply while they implement their monetary policies. The forex market was created to facilitate the sale of currency to customers who intend to take delivery of the currency; however, the vast majority of trading is done by speculators seeking nothing more than profit.
One of the questions people ask me is - is it really possible to make money in Forex? The answer I usually give is - it depends. Do you have what it takes? Do you have the patience and the mental stability? Can you stand that you're not right half of the time, day after day, yet you are still making money?
These are just a few traits that a Forex trader must possess. However, most people have wrong ideas, for example:
So that the currency that you bought will have an increased value compared to the one that you sold. Also take note that an exchange rate is the ratio of one currency when valued against another currency. It simply indicates how many of one particular currency can purchase another currency.
For example, you bought 10,000 euros at the EUR/USD exchange rate of 1.18 (remember that currencies are always traded in pairs). This means that you paid $11,800 in exchange for 10,000 euros. After two weeks, you exchange your 10,000 euros back into US dollars at that time's current exchange rate of 1.25. This means that you sold your 10,000 euros for $12,500. As a result, you have just earned a profit of $700. If you can keep making similar trades, you can eventually accumulate large sums of money. This is basically the concept of how you can make money with
The forex is the largest, fastest-growing financial marketplace in the world. Every trading day the forex market handles a transaction volume of nearly $3.2 trillion, according to a survey done by the Triennial Central Bank in 2007. To put that figure in perspective, the average daily volume on the forex market is nearly 20 times larger than on the New York Stock Exchange.
The need for foreign exchange is driven by travelers, multinational corporations, and governments. Tourists from the United States need euros for their European vacations; corporations such as Microsoft exchange profits made overseas into U.S. dollars. Government hold reserve currencies and manipulate the money supply while they implement their monetary policies. The forex market was created to facilitate the sale of currency to customers who intend to take delivery of the currency; however, the vast majority of trading is done by speculators seeking nothing more than profit.
One of the questions people ask me is - is it really possible to make money in Forex? The answer I usually give is - it depends. Do you have what it takes? Do you have the patience and the mental stability? Can you stand that you're not right half of the time, day after day, yet you are still making money?
These are just a few traits that a Forex trader must possess. However, most people have wrong ideas, for example:
- You must be right all the time to make money in Forex. Wrong. You can be right just 30% of the time, but if you play your cards right, you will still be profitable.
- You must have some super secret system or indicator, sold just for $999. Wrong. You can just as well do ok with free information all over the internet. Actually, the most successful trading systems I've seen, are based on very simple facts and price analysis.
- If only you knew something others don't, then you could become a millionaire overnight by investing just $1000. Wrong. In Forex it is actually easier, if you know what others will be doing under certain circumstances, then you can just exploit it. And of course, $1000 is fine for the beginning, but you will want to invest more if you want to grow huge.
So that the currency that you bought will have an increased value compared to the one that you sold. Also take note that an exchange rate is the ratio of one currency when valued against another currency. It simply indicates how many of one particular currency can purchase another currency.
For example, you bought 10,000 euros at the EUR/USD exchange rate of 1.18 (remember that currencies are always traded in pairs). This means that you paid $11,800 in exchange for 10,000 euros. After two weeks, you exchange your 10,000 euros back into US dollars at that time's current exchange rate of 1.25. This means that you sold your 10,000 euros for $12,500. As a result, you have just earned a profit of $700. If you can keep making similar trades, you can eventually accumulate large sums of money. This is basically the concept of how you can make money with
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