Get Money From Forex Trading you sould Know
Money from trading forex and profit
Become rich that is not easy but you can try,how to get money form trading forex.In the forex market, we buy or sell currencies, in order to get money (profit / profit) from price changes. From this point of view, forex trading activity is actually similar to financial market transactions in general, such as stocks. If you already have experience in stocks, you should not find it difficult to trade forex. However, you can also 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 the stock market or other markets. The first and foremost is that forex traders can benefit both when prices rise or when prices fall . Unlike the stock where we can only profit if the price goes up.
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 a higher level in the future than now. And if that hope really materializes, then the EUR / USD price chart will move up, and we can make money from forex trading.
Conversely, if we do 'sell' EUR / USD, meaning we sell the Euro currency by buying US Dollars at the same time. That we do when we expect the US Dollar to strengthen even more than the Euro in the future. If that happens, then the EUR / USD price chart will move down, and we can still make 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. Now, 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. The reason is, in every foreign exchange transaction we simultaneously buy one currency and sell another.
In one pair, the first currency listed to the left of the slash ("/") is known as the base currency (Base Currency). While the second currency on the right is called the counter currency (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.
Selling ( 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 on an international scale market. These prices will be seen in the trading software provided by brokers for us to use as traders, in graphical form. For example, as shown below:
Look to the right side of the picture. Looks at 1.1593 in the white box. That is the current EUR / USD price. However, if we are going to buy or sell, then the price that will be used is not the price, but the price that appears 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 brokers or institutions that mediate you with the market. This can be compared to the selling rate and buying rate if you exchange foreign currency in a Money Changer.
Difference in Price of Offer and Request (Spread)
The Bid Price is the price at which you as a trader will sell (sell) the base currency.
The Ask Price is the price at which you as a trader will buy (buy) the base currency.
The bid price is always lower than demand, and the difference is often referred to as Spread .
Close / Close Transaction
After you open a position in a currency pair, of course later you will need to also close the position to realize the benefits of forex trading. How to do it Close.
So:
If you originally Buy, to close means CLOSE (Sell).
If you originally sell, to close means CLOSE (Buy).
Next, see the concrete example below about how to make money from forex trading.
Examples of Practices to Make Money From Forex Trading
Let's do a simulation with the GBP / USD (Pound Sterling and US Dollar) currency pairs.
One time, GBP / USD displayed a bid price of 1.2800 and an ask price of 1.2804. If at that time you estimate the value of GBP will strengthen / increase, then you take BUY position GBP / USD at 1.2804. After some time, the price will change. Can move up, can also move down.
If your estimate is correct, the value of GBP / USD will move up. For example, up to the number written in the Scenario 1 box. Now, that's your chance to be able to realize the benefits of forex trading by doing GBP / USD CLOSE (Sell) at 1.2820.
Of the 1 forex trading transaction, the benefits obtained are: 1.2820 - 1.2804 = 16 Pip (Pip is the smallest price movement available in currencies).
Now, the question is now, what if it turns out the GBP / USD price moves in a different direction, or does not match your expectations?
For example GBP / USD turns out to actually go down to the numbers listed in the Scenario 2 box. If you do CLOSE (Sell) in this position, it means: 1.2770 - 1.2804 = -34 Pip (you lose 34 Pip).
Thankfully, in forex trading, when you do CLOSE, this depends on the analysis and it's up to you . Is GBP / USD expected to continue to fall? If so, then you should close now to minimize losses. Or are you sure GBP / USD will rise again? If so, don't close now, wait for the price to rise again to get profit.
Simple, isn't it !?
The pip you get here is an advantage for you. It's just that, to shift the profit in the form of pip into money, more calculations are needed.
Calculating Forex Trading Benefits
Pip will be how much money (dollars), depending on the number of lots and the size of the contract you use.
The number of lots is the volume of transactions that you enter on the order form when opening a forex trading position. While the contract size is usually attached to the type of account you choose when opening an account at a forex broker.
Generally, there are three types of contracts:
Standard contract: 100,000 units (one hundred thousand units; if we trade in US Dollar base currency, it can be called one hundred thousand USD).
Mini contract: 10,000 units (ten thousand units; if we trade in US Dollar base currency, it can be called ten thousand USD).
Micro contract: 1,000 units (one thousand units; if we trade in US Dollar base currency, then it can be called a thousand USD).
Illustration of the calculation of profit in Scenario 1, assuming an order of 2 lots and using a standard contract, will be like this:
Profit ($) = Pip Profit X Contract Size ($) X Lot
Profit ($) = 16 pips X 100,000 USD X 2 Lot = 320 USD.
So, let's try to summarize in the following picture.
Looking at the example illustration calculation above, it might be implied in your mind, "Then, the forex trading capital is up to thousands of dollars? The smallest micro contract is a thousand dollars, if the standard is one hundred thousand. It's expensive."
Not. Even though the contract arrangement is like that, but capital for forex trading can be as cheap as 10 USD. How come?
This is because there are forex brokers providing facilities called leverage .
Leverage is a proportional loan scheme with collateral, which can increase the purchasing power of funds owned by traders. For example a broker offers 1: 100 leverage, meaning a trader with a capital of 10 USD can have a purchasing power of 1000 USD (from 10x100). In this case, 10 USD becomes a guarantee fund (Margin) that the trader needs to hand over to the broker.
Small, isn't it !? Even though later the profit will also be adjusted proportionally with the leverage used by the trader, but at least it is clear that the capital needed by the trader to start trying to get money from forex trading is very low.
Even more profitable for us now, all trading platforms / software from brokers have performed the calculation process above automatically . So, we easily know the dollar value of our profits without the need to bother counting again, just trying to make a profit transaction.
For those of you who like to count, can see a more complete explanation in a special article about how to calculate profit pips . However, if you are satisfied with this explanation and want to see firsthand how to do buy and sell orders, register to create a demo account . With a demo account on a forex broker, you can do forex trading simulations using virtual money (not real money) for free. You can also directly apply the knowledge gained from various forex trading learning materials.
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