How to make money on forex?
The principle of making profit on Forex is quite simple: it is formed due to the difference in exchange rates. For example, you exchange 100 euros for 120 dollars and wait for the dollar to rise. In this case, you will be able to sell your 120 dollars already more expensive, say, for 120 euros (against 100 invested initially). These 20 euros will be your profit.
In general, the principle “invested 1 ruble - removed 1.2 in a year” is familiar to everyone by the example of bank deposits. Despite the similarities in the description, the Forex market for an individual has nothing to do with bank deposits and is much more complicated. But it gives incomparably more opportunities to earn, as we saw in the example above. The international Forex currency market works around the clock and is available anywhere in the world, and the value of the currencies that are formed there is the real and fair price of a particular currency at the moment. The Forex market does not stop working even for a minute - after all, the currency for various international operations is constantly needed: first, for example, to American businessmen, and when they go to bed - Asian. Therefore, there are 4 main trading sessions on the Forex market during the day, in each of which a particular region is more active and in which, accordingly, more transactions are made with certain currencies: in the European session - in euros, in Asian - with the yen.
Today, the Forex market is a huge machine with a daily turnover of more than 3 trillion. dollars. And in order to learn how to make money on it, a number of conditions must be taken into account.
Forex Earnings Strategy
Broker and Leverage
It is impossible for an individual to enter the international currency market, and trades will start from an amount of $ 100,000. Therefore, in order for a private trader to make money in the Forex market, a whole financial infrastructure has been built. How to trade and make money on forex? The key link in it is a broker company: it has special access to international bidding and can bring its customers' deals to the market, as well as provides all the conditions for trading and serves transaction execution. But besides this, brokers have the opportunity to give customers so-called. “Leverage”: if you want to enter the market with $ 1,000 (with a minimum transaction amount of 100,000 thousand), your broker can increase your initial capital 100 times to the required minimum $ 100,000 - that is, provide you with a loan leverage of 1: 100. With an amount of $ 100,000, you can already start trading on the international currency market. It is now possible to request a leverage from a broker automatically today. The most common shoulder option is 1: 100, sometimes more (up to 500), and less. As a rule, payment of the provision of leverage is already included in the broker's commission.
Rules of control over money (money managment) or how to make money on trading forex.
However, having leverage will not give you the opportunity to start making money in the Forex market right away. Trading risks will concern only your real money, and the slightest drawdown on the account - that is, a temporary depreciation of the currency being traded - may lead to loss of your deposit (amount of invested funds).
For example, you deposit $ 1,000 into your trading account, take a leverage of 1: 100 from the broker and make a minimum transaction: you buy 80,000 euros for $ 100,000. However, the euro can not only rise in price, but also become cheaper, and it is the latter that happens in your case. If it falls in price by only 1 cent (0.1 dollars), then your losses will amount to just $ 1000 (remember, with a transaction amount of $ 100,000). This risk will completely fall on you, and if you no longer have funds in your account that may be collateral, your transaction will be automatically closed and you will incur a loss of $ 1,000.
Therefore, you need to clearly calculate the amount of the starting amount based on your trading strategy, determine the level of drawdown and take into account trading risks in order not to lose the deposit. It is necessary to constantly take into account the rules of money management (money management) and not allow unreasonable risks in order to earn money in the Forex market, first of all, stably, and not by chance.
Earnings in the Forex market are largely determined by your ability to analyze the market and the ability to predict it. There are two large classes of analysis of financial markets - technical and fundamental, which help traders around the world to make their forecasts regarding future price behavior. In order to understand how to successfully make money on Forex, you need to practice using different types of analysis and choose the methods most suitable for you that give the most accurate forecast.
Own trading strategy is what any trader needs: both a beginner and an experienced one. A trading strategy is your personal trading rules that take into account your knowledge of the market and the market situation and your wishes for profitability taking into account risks. It is she who will give you an understanding: what goals do you pursue, how do you plan to achieve them and what to do in critical situations.