Did you know that you can find a market that is open 24 hours a day? The market is called Forex market and if you go there, you can't find services, commodities and goods. The Forex market is the place where different kinds of currencies are traded. In every trade, two currencies are involved. For instance, you can sell your Canadian dollars for Euros; or you can pay Japanese Yen for US dollars. Forex rates or exchange rates can change unexpectedly. You need to monitor these exchange rates in order to determine if the price of a certain currency increased or decreased.
In one day, a certain currency can change its value for a number of times without prior notice or warning. Hence, it is very vital to keep track of the trends. Political events and economic changes are huge contributors to the movement of the Forex market. To help you determine if you are losing or gaining in Forex trading, this article will be discussing important points you have to take nate of.
The Forex investment is greatly affected by the exchange rate and in order to understand the relationship between the two, you should also be familiar with Forex quotes. Like the currency pairs, Forex quotes can be found in pairs as well. Here is a very good example:
1.Suppose the currency pair is USD (US dollar) and CAD (Canadian dollar)
For this pair the Forex quote is USD/CAD=170.50. Another way to interpret this quote is by saying that 1 US doll is equivalent to 170.50 Canadian Dollars. The base currency is the currency found at the left side. This is always equivalent to 1. The currency on the right portion is called the counter currency. The currency with a higher value or the stronger one, is always positioned at the left side. In our example, the stronger one is the US dollar. In Forex quotes, the central currency is USD. Thus, you will find this in most Forex markets.
Wondering how you can determine if you are reeling in profits or losing your money?
2.This time use EUR to USD. Assuming that the Forex rate is 1.0857; in this example, the USD is the weaker currency. If you bought 1,000 Euros, you will need to pay $1,085.70. After a year, the Forex rate was at 1.2083 and this means that the Euro's value increased. If you decide to sell the 1,000 Euros now, you will get $1,208.30; now, in this transaction, you gained $122.60. What if the Forex rate a year after was 1.0576? This means that the Euro's value weakened. If you still decide to sell the 1,000 Euros, you will only receive $1,057.60 which means that you lost $28.10; did you get it?
Risk is a part of Forex trading which is also the situation with mutual funds and stocks. The unexpected changes and fluctuations of the exchange market is the root of the risk. Government bonds has low level risks but the returns is not as high as the profits in Forex market. The forex industry can give you high profits but you must be prepared of the risks involved.
Set short and long term financial goals. In doing this you can minimize the risks involved in your financial security. Also, it will enable you to trade with confidence and comfort. Feel free to utilize available training tools. These aids can help you make wise and effective decisions. Now, you can check if you are gaining profits from Forex or not. - 23309
About the Author:
Improve your returns from Forex trading with the help of Fap Turbo. Before you buy online products, watch Damon Nelson's Fast Video Reviews at FastVideoReview.com.
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