You are making money on Forex due to the difference in exchange rates. Trade mechanism is simple: for example you buy 1 euro for $ 1.2 and wait until the euro will rise to 1.3 dollars. Once that happens, you sell the euro and get the profit of $ 0.1.
You can make a profit with the same success not only on increasing buying currency, but also on the sale of foreign currency, the price of which will soon go down. Of course, these figures are for an illustrative purpose only, the reality of trading is in a large volume. And in proportion to its volume your profits grows.
IN ORDER TO EARN THE CURRENCY IN THE MARKET, THE TRADER MUST :
BE ABLE TO ANALYZE THE MARKET
The basis of fundamental analysis is the reaction rates for various macroeconomic events
- Output of statistical data reflecting the state of the economy of the countries whose currencies are traded in the Forex market;
- statements of countries leaders;
- statements of Governors of the Central banks;
- economic news, etc.
At the core of technical analysis is three axioms.
- The movement of market prices take all into account.
- History repeats itself.
- Market prices move directionally.
All of this is reflected in the graphs of exchange rates, which are analyzed with the light of these axioms, one can make predictions about the behavior of currencies.
Usually, traders predict price movements in the next few hours or at most in a couple of days. And use for making trades just a short-term forecast. The one who thinks about the question of how to earn on Forex it is not necessary to know how much the currency will cost in a month or at the end of the year. By the way, to make a forecast for the month is much more difficult than the next day. Although a reasonable approach to the matter of long term Forex trading strategies also help to make a good profit.
KNOW HOW TO CHOOSE THE MOMENT FOR ENTERING AND EXITING FROM THE TRANSACTION
A trader who wants to make money on Forex should be able to make predictions about a course change and understand when it is best to enter a trade.
OBSERVE THE RULES OF CAPITAL CONTROLS (MONEY MANAGEMENT)
For any trader it is very important to have a protection system against risk, which will take into account all the rules of capital controls. When the system properly constructed trader will receive a stable income.
To meet the security system it is important to have strong nerves. The market can’t solve emotional solutions .Such decisions may eventually lead to large losses.
Observance of all trading basics guarantee 60% that the trader will get profit in the market. In this case profit margins will depend on the quality of the trader and his ability to forecast the market.