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How Are People Making Money With Forex? – Internet Marketing …

Making money with Forex has become much more available to those with a busy lifestyle since the introduction of internet software that can monitor the market and carry out trades automatically. Before this software, most people would have found foreign currency exchange intimidating or too demanding due to the need for constant trading.

Around 4 Trillion dollars is traded every day in foreign exchange (source: FXCM ), and the market is open to small traders, so it is understandable why Forex is so attractive. The trades are done on currency pairs like EUR/USD where perhaps you sell US dollars and buy Euros. Throughout the day the exchange rate varies constantly by small amounts and so an opportunity is available to buy low and sell high to make money.

How to invest in Forex

The variation is usually much less than one percent in the day and so it is difficult to see at first how a small trader could make anything like the outrageous claims that are advertised. The first concepts that need to be explained are those of the margin and leveraging.

A small trader can make large trades due to the provision of only having to provide a percentage of the cost of the trade (the margin – sometimes only 1 percent), but still receive all of the profit, as if the whole sum of money had been paid. A 1 percent margin means that there is a 100:1 leverage. This is a common attraction of the Forex market as it allows the opening of trades that are larger than the capital in the account.

Currency changes in Pips

The currency changes are limited to a smallest movement in value and this amount is called a pip. For most currency pairs this is at the fourth decimal place (such as 0.0001) but others, like the USD/JPY, are at the second decimal place, or 0.01.

Profit and loss is often stated in pips and from this the actual amount of money can be calculated.

Trading lots

Forex trading can only be carried out in quite large trades and the minimum amount is called a lot. A lot is usually $10,000 which would put Forex out of the reach of most people if it were not for the leverage system. A 10k lot can be purchased for $500 with a 20:1 leverage or for just $100 with a 100:1 leverage.

Managing the risk of trading in Forex

Unless the currency rates are monitored continually it would be possible for an investment to be wiped out very quickly. Thankfully Forex software can watch the rates and make automatic transactions at preset thresholds. The thresholds are called the stop for the maximum level of loss and the limit for the level at which the profit should be taken.

Forex trading by signals and robots

Forex brokers can provide indications to traders during the day to ensure that opportunities are not missed. These messages are called signals and can provide an extra chance to make more money if it all right to be interrupted throughout the day.

Forex software developers calculated algorithms to make the process completely automatic. Using the Forex signals and stop and limit thresholds, the software can simply be left to carry out the trades on its own. The applications are finely tuned and can work with multiple currency pairs. Some claim to make enough money to double an investment every month.

The choice of using signals or robots will be a personal decision dependent on experience and available time. With the availability of easy to use software and small margins, making money with Forex has become another option for the investment by small and major investors, with the potential of a very high return.

Source: How Are People Making Money With Forex? – Internet Marketing …

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