How to get money from Forex trading

In the forex market, we buy or sell currencies, with the aim of getting money (profit / profit) from price changes. From this point of view, forex trading activities are actually similar to financial market transactions in general, such as stocks. If you already have experience in stocks, you should not have difficulties in trading forex. However, you also can still trade forex even though there is no experience at all in other investments.

However, there are a number of striking differences between transactions in the forex market and other stock markets or markets. The first and foremost is, forex trading players can get profits both when prices rise and when prices fall. Unlike stocks where we can only profit if prices rise.

How come?

This is because in forex, buying and selling currencies is done in pairs. For example, if we buy a EUR / USD pair, we buy the Euro by selling US Dollars at the same time. In this case, we expect the Euro to strengthen to be higher in the future compared to now. And if that hope really materializes, then the EUR / USD price chart will move up, and we can get money from forex trading.

Conversely, if we sell EUR / USD, it means we sell the Euro currency by buying US Dollars at the same time. We do that when we expect the US Dollar to be stronger than the Euro in the future. If that happens, then the EUR / USD price chart will move down, and we can still get money from forex trading even though the Euro exchange rate decreases.

A number of important concepts in Forex transactions

From the discussion above, of course you can already conclude a number of basic concepts in forex. Well, in this section we will explain further.

Currency Pair Writing forex trading instruments is always written in pairs, such as EUR / USD, GBP / USD or USD / JPY. Why, in every foreign exchange transaction we simultaneously buy one currency and sell another.In one pair, the first currency listed on the left side of the slash ("/") is known as the Base Currency. While the second currency on the right is called the counter currency.

Buy / Sell in Forex Trading In forex trading, the most commonly used terms are:Buy (Buy or Long): If you think the value of the base currency will rise.Sell (Sell or Short): If you think the value of the base currency will go down.

Rate / Exchange Rate / Price Prices in forex trading are formed in markets of international scale. These prices will be seen in the trading software that brokers provide for us to use as traders, in graphical form. For example, as shown below:

Look to the right side of the image. Looks at the number 1.1593 in the white box. That is the current price of EUR / USD. However, if we are going to buy or sell, then what will be used is not the price, but the price shown in the red box in the upper left corner of the image.

Why is that? Because the difference between the two prices will be an advantage for the broker or institution that mediates you with the market. This can be likened to the selling rate and the buying rate if you do currency exchange at Money Changer.