HOW TO MAKE PROFIT?
One of the most difficult things for forex beginners to understand is how you make profits trading currencies. At the same time, since we don't charge commissions, many people don't understand how we make money either.
Here are the answers!
How do you make money?
Let's take an example based on the graph below:
• You open an Classic Account with €2,000
• You think the Euro will go down against the US dollar
• You decide to sell 200,000 Euros once the bid price reaches 1.2850 US dollars
• Because you are on 1:100 margin, this costs €2,000 – we provide the other €198.000
• There is no margin left in your account at this point
• The Euros you sold are worth $257.000 US dollars
• You decide to buy Euros once they go down to an ask price of 1.2750 US dollars
• The Euro ask price reaches 1.2750 US dollars and you buy
• This costs $255,000 US dollars
• You have now sold 200.000 Euros for $257.000 and bought them for $255,000
• The difference is $2,000 US dollars or €1568 Euros
• Your profit for a €2,000 investment is €1568 Euros – a 74.43% return!
Here's another example:
• This time you think the Euro will go up
• You open a Cent Account with 20 US dollars
• You decide to buy 1500 Euros when the Euro ask price goes down to $1.2750
• It does and the cost is $1912.50
• Because you have 1:100 margin this only costs you $19.12 – we provide the rest
• The Euro then goes up to 1.2850 US dollars
• You sell your 1500 Euros for $1927.50
• Your profit is $15.00 – a 75% return on your $20 investment!
How do we make money?
You've made money trading Euros and dollars. We don't charge any commission, so how do we make money?
Notice in the example above that we talked about bid prices and ask prices. These aren't the same:
• The bid price is what you pay when you're buying currency
• The ask price is what you get when you're selling - and is less than the bid price
The difference between the two is known as the spread. This is where we make our profit. In the first example above, the spread is 0.0002 or two points, and so our profit is about $30 on $200,000.
Managing your risk
In the examples above, the dollar moved in the direction you expected. However, it could move in the opposite direction, and you could lose money. There are a number of things you can do to manage this risk:
• Change the default 1:100 margin for your account - 1:10 for low risk or 1:500 for high risk
• Manage your money by spreading it over several investments
Use a number of other risk management methods
FOREX TRADING
Start forex trading today and make money in the world’s largest financial market. Discover the benefits of online fx trading with Forex4you, the best forex broker in the industry:
• Get access to fx trading tools designed for the best forex trader
• No commission
• Low spreads save you money on fx trading
• Free demo account to learn forex trading
• Start trades with as little as 2 cents
• You choose the level of forex trading leverage: 1:10 to 1:500
• Get rewarded with lucrative fx trading bonuses
• Trade all major currency pairs
Join Forex4you and become the best forex trader you can be! Learn forex trading with a free demo account or open an Fx4u Cent Account and make trades beginning at just 2 cents. You'll pay no commission and earn attractive bonuses – the more fx trading you do, the more you earn!
We give you access to our daily fx trading tips, letting you stay on top of the market and learn forex trading as you do. When you trade with Forex4you you can achieve forex trading leverage of up to 1:500, so you only need $20 to trade $10,000.
At Forex4you, we're committed to offering the best forex trader services possible. Join today and see what we mean!
What is forex trading? How do people make money in the forex market?
When you go on vacation, you buy foreign currency. When you return, you change back the foreign currency that you have left. The problem is that you lose money, because you pay a high rate when you buy foreign currency and get a low rate when you sell. This is the spread, and it’s how the bureau de change makes a profit.
What if the spread were very small?
• You buy $1,000 in London
• The bureau de change is selling at 1.60 USD/GBP and buying at 1.62 USD/GBP
• You pay £625 for $1000
• You would lose £7.72 if you sold the $1,000 back right away – but you don’t
• You wait two weeks and the dollar gets stronger
• The bureau de change is now selling at 1.57 USD/GBP and buying at 1.59 USD/GBP
• You sell your $1,000 and get £628.93
• You’ve made £3.93 on forex trading
You can’t get small fx trading spreads from a bureau de change, but you can get them from a forex broker. You can also do fx trading on margin, so you only need to come up with 1% of the money if you have leverage of 1:100. That means you would only have to invest £6.25 to make the £3.93 profit above. Of course, your forex trading profits aren’t guaranteed; the dollar could go down as well as up.
With Forex4you, you can do forex trading from anywhere in the world, and in most major currencies. Start trading today with Forex4you:
• Learn forex trading free with a fx trading demo account
• Open a real forex trading account with no paperwork and start fx trading today
• Download our fx trading terminal – including fx trading analysis tools
• Get daily forex trading tips
One of the most difficult things for forex beginners to understand is how you make profits trading currencies. At the same time, since we don't charge commissions, many people don't understand how we make money either.
Here are the answers!
How do you make money?
Let's take an example based on the graph below:
• You open an Classic Account with €2,000
• You think the Euro will go down against the US dollar
• You decide to sell 200,000 Euros once the bid price reaches 1.2850 US dollars
• Because you are on 1:100 margin, this costs €2,000 – we provide the other €198.000
• There is no margin left in your account at this point
• The Euros you sold are worth $257.000 US dollars
• You decide to buy Euros once they go down to an ask price of 1.2750 US dollars
• The Euro ask price reaches 1.2750 US dollars and you buy
• This costs $255,000 US dollars
• You have now sold 200.000 Euros for $257.000 and bought them for $255,000
• The difference is $2,000 US dollars or €1568 Euros
• Your profit for a €2,000 investment is €1568 Euros – a 74.43% return!
Here's another example:
• This time you think the Euro will go up
• You open a Cent Account with 20 US dollars
• You decide to buy 1500 Euros when the Euro ask price goes down to $1.2750
• It does and the cost is $1912.50
• Because you have 1:100 margin this only costs you $19.12 – we provide the rest
• The Euro then goes up to 1.2850 US dollars
• You sell your 1500 Euros for $1927.50
• Your profit is $15.00 – a 75% return on your $20 investment!
How do we make money?
You've made money trading Euros and dollars. We don't charge any commission, so how do we make money?
Notice in the example above that we talked about bid prices and ask prices. These aren't the same:
• The bid price is what you pay when you're buying currency
• The ask price is what you get when you're selling - and is less than the bid price
The difference between the two is known as the spread. This is where we make our profit. In the first example above, the spread is 0.0002 or two points, and so our profit is about $30 on $200,000.
Managing your risk
In the examples above, the dollar moved in the direction you expected. However, it could move in the opposite direction, and you could lose money. There are a number of things you can do to manage this risk:
• Change the default 1:100 margin for your account - 1:10 for low risk or 1:500 for high risk
• Manage your money by spreading it over several investments
Use a number of other risk management methods
FOREX TRADING
Start forex trading today and make money in the world’s largest financial market. Discover the benefits of online fx trading with Forex4you, the best forex broker in the industry:
• Get access to fx trading tools designed for the best forex trader
• No commission
• Low spreads save you money on fx trading
• Free demo account to learn forex trading
• Start trades with as little as 2 cents
• You choose the level of forex trading leverage: 1:10 to 1:500
• Get rewarded with lucrative fx trading bonuses
• Trade all major currency pairs
Join Forex4you and become the best forex trader you can be! Learn forex trading with a free demo account or open an Fx4u Cent Account and make trades beginning at just 2 cents. You'll pay no commission and earn attractive bonuses – the more fx trading you do, the more you earn!
We give you access to our daily fx trading tips, letting you stay on top of the market and learn forex trading as you do. When you trade with Forex4you you can achieve forex trading leverage of up to 1:500, so you only need $20 to trade $10,000.
At Forex4you, we're committed to offering the best forex trader services possible. Join today and see what we mean!
What is forex trading? How do people make money in the forex market?
When you go on vacation, you buy foreign currency. When you return, you change back the foreign currency that you have left. The problem is that you lose money, because you pay a high rate when you buy foreign currency and get a low rate when you sell. This is the spread, and it’s how the bureau de change makes a profit.
What if the spread were very small?
• You buy $1,000 in London
• The bureau de change is selling at 1.60 USD/GBP and buying at 1.62 USD/GBP
• You pay £625 for $1000
• You would lose £7.72 if you sold the $1,000 back right away – but you don’t
• You wait two weeks and the dollar gets stronger
• The bureau de change is now selling at 1.57 USD/GBP and buying at 1.59 USD/GBP
• You sell your $1,000 and get £628.93
• You’ve made £3.93 on forex trading
You can’t get small fx trading spreads from a bureau de change, but you can get them from a forex broker. You can also do fx trading on margin, so you only need to come up with 1% of the money if you have leverage of 1:100. That means you would only have to invest £6.25 to make the £3.93 profit above. Of course, your forex trading profits aren’t guaranteed; the dollar could go down as well as up.
With Forex4you, you can do forex trading from anywhere in the world, and in most major currencies. Start trading today with Forex4you:
• Learn forex trading free with a fx trading demo account
• Open a real forex trading account with no paperwork and start fx trading today
• Download our fx trading terminal – including fx trading analysis tools
• Get daily forex trading tips
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