Basic Forex : The Meaning Of Forex

What is forex?

Forex is derived from the word “Foreign Exchange”, which means foreign currency exchange, or the exchange of one currency to another, the goal is to initially foreign payment.

Because of differences in supply and demand within a certain period of time, resulting in fluctuations in currency values compared to the other one. The difference of the average difference between the value of money at a time is then utilized to take advantage.

Since there is such understanding is finally currencies are traded in a market called the forex market.

Forex trading is an activity Buy (buy) or Sell (sell) the currency continuously and consistently for profit.

They can be interpreted that the forex trading is the core activity of currency to exchange with each other continuously for profit.

In contrast to trading stocks only make a profit if the stock price goes up we buy, the forex trading we can benefit from two directions, either the price up or down example:

The advantage of the price rise:

The price or exchange rate GBP / USD is now 1.5000
This means that 1 GBP = 1.5 USD
(1 GBP (pounds) if exchangeable into USD (dollars) to 1.5 USD)

Now I have the capital amount of $ 150.
I predict that the exchange rate GBP / USD Up
What I do is BUY GBP / USD or GBP purchased using USD, in the sense of exchanging my dollars into pounds.

After the exchange, $ 150 I changed to 100 pounds.
After an hour exchange rate GBP / USD rose to 1.7000
This means that 1 GBP = 1.7 USD

I need to do now is SELL GBP / USD or redeem back 100 Pounds which I hold to USD.
Once redeemed my 100 pounds $ 170 (100 x 1.7)
Of transaction BUY SELL within an interval of one hour of my capital was changed from $ 150 to $ 170, which means I get a profit of $ 20.

Profit-making from the price down

The price or exchange rate GBP / USD is now 1.5000
I predict exchange rate GBP / USD will go down.
So what I do is SELL GBP / USD. let’s say I want to sell 100 pounds.

Since I do not have the pounds to be sold, the process is I borrowed 100 pounds money broker to be sold or exchanged into dollars.

Once redeemed 100 pounds turn into $ 150.
After an hour of exchange rate, GBP / USD fell from 1.5000 into 1.4000
This means that 1 GBP = 1.4 USD or 1 USD = £ 0.72

What I do now is I exchange back $ 150 to pounds. So I will earn 107 pounds.

Now I hold 107 pounds .From this 107 pounds, 100 pounds, I returned to the broker, and the remaining 7 pounds this is my advantage.

From then BUY SELL transactions within an interval of one hour of my capital was changed from 100 pounds to 107 pounds, which means I get a profit of 7 pounds.

In practice it is not as complicated as explained above because every broker provides a system which facilitates customers.

Once you predict the price will go up, you BUY. if it is indeed your UP CLOSE then you profit The advantage is calculated from the number of points earned multiplied by the number of lots traded.

Similarly, if you predict the price will go down, you SELL, if you do indeed DOWN CLOSE then you profit.

By understanding that we can benefit from this two-way, the market declined and the market rises, it is hoped you can see that there is a great opportunity offered by the forex trading for you in order to make a profit anytime, anywhere and on market conditions as any.