Wednesday, April 13, 2011

Forex daily

While thousands of people trade in Forex daily, some still wonder - what is Forex trading?

In short, it's buying and selling currencies - or money, if it sounds better. Imagine that you live in Great Britain. Your friends tells you he is going to the US next week for vacations and therefore he requires some American money. Obviously, in the US no shop would accept British pounds.

Luckily, you have some dollars left from your last business trip to New York, so you take your wallet, get twenty banknotes of 100 USD and sell them to your friend. Obviously, he pays you back with British pounds - because you live in London, you are not interested in any other currency.

Well, you have just made a forex operation! Now, imagine that instead of taking British pounds from your friend, you ask him to give you back the same amount he received - 2000 USD, to be accurate. At this moment, the exchange rate was 1.4282, let's assume. He spends two joyful weeks in the US, traveling around the states, tasting some delicious stakes with Californian wine and even singing local anthem. Then your friend comes back to London and he has to give you back 2000 USD. Luckily, the exchange rate of US dollar versus British pound has increased dramatically due to some latest news from the US - it's 1.4021 now, meaning US dollar is now more expensive in the UK! So, once you receive 2000 USD back, you go to a currency exchange window at your favorite bank and change dollars back to pounds. And then - surprize, you made a profit because of the currency rate fluctuations!

Now, you actually did some primitive form of forex trading!

Nowadays, there are more sophisticated and high-tech ways to do forex trading rather than selling currencies to your friends and fellows. You can open an account with a forex broker and start trading online - from any place in the world, with tens or hundreds of different currencies! And thanks to leverage - automatic "credit" system, your profits can increase ten times or even one hundred times!

So, why waste time, why not start live forex trading right now! Forex4you will be glad to assist you with any queries that may arise throughout the process!

1 comment:

  1. eToro is the best forex broker for newbie and pro traders.