Basics of Forex Market
The concept of trading on the Forex market is based on the process of buying one currency for another and inverse an operation of selling it, to make profit. You can make such transactions with almost every currency of the world.
Let us analyze some examples.
Example 1: You have 1 600 USD and the exchange rate of GBPUSD is 1.6000, which means that you can buy 1 000 GBP for 1 600 USD. You buy 1 000 GBP, hoping that GBP will rise against USD. After a while, GBP really rises against USD up to 1.6100 for 1 GBP. At such rate, you can exchange 1 000 GBP for 1 610 USD. This way, you have fixed a profit of 10 USD.
Example 2: Let us assume that you have 1 000 GPB, and the exchange rate of GBPUSD is 1.6000. You sell your GBP for 1 600 USD and you hope that GBP falls against USD. After a while, the rate falls up to 1.5900, and you decide to make a reverse operation and buy GBP for 1 600 USD at this rate. As a result, you have 1 006.28 GBP. This way, you have fixed a profit of 6.28 GBP.
We can make several conclusions based on these examples:
1. You can earn with both ways: when one currency either rises or falls against another one.
2. The currency always rises or falls only against another one.
The concept of trading on the Forex market is based on the process of buying one currency for another and inverse an operation of selling it, to make profit. You can make such transactions with almost every currency of the world.
Let us analyze some examples.
Example 1: You have 1 600 USD and the exchange rate of GBPUSD is 1.6000, which means that you can buy 1 000 GBP for 1 600 USD. You buy 1 000 GBP, hoping that GBP will rise against USD. After a while, GBP really rises against USD up to 1.6100 for 1 GBP. At such rate, you can exchange 1 000 GBP for 1 610 USD. This way, you have fixed a profit of 10 USD.
Example 2: Let us assume that you have 1 000 GPB, and the exchange rate of GBPUSD is 1.6000. You sell your GBP for 1 600 USD and you hope that GBP falls against USD. After a while, the rate falls up to 1.5900, and you decide to make a reverse operation and buy GBP for 1 600 USD at this rate. As a result, you have 1 006.28 GBP. This way, you have fixed a profit of 6.28 GBP.
We can make several conclusions based on these examples:
1. You can earn with both ways: when one currency either rises or falls against another one.
2. The currency always rises or falls only against another one.
