HOW TO MAKE MONEY THROUGH FOREIGN CURRENCY TRADING

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HOW TO MAKE MONEY THROUGH FOREIGN CURRENCY TRADING

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In Foreign Currency Trading you either BUY or SELL Currencies. The Purpose of Foreign Currency Trading is to excahnge one currency for another in the expectation that the price will change. More Precisely that the currency you bought will increse in value compared to the one you sold.

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FOR EXAMPLE EUR You purchased 20000 euros at the EUR/USD exchange rate of 1.1800 USD TRADERS ACTION +20000 -23600 One week later you exchange your 20000 euros back into U.S. dollar at the exchange rate of 1.2500 -20000 +25000 You earn a profit of 1400 0 +1400 An exchange rate is simply the ratio of one currency valued against another currency. Currencies are traded in pairs. Buying/Selling one currency in the pair automatically creates the opposite positionSell/Buy in the other currency in the pair. EUR 20000 x 1.18 US 23600 EUR 20000 x 1.25 US 25000 When you Buy EUR 20000 you automatically Sell 23600 When you Sell EUR 20000 you automatically Buy 25000

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HOW TO READ A FOREX QUOTE Currencies are always quoted in pairs such as EUR/USD or GBP/USD. In every foreign exchange transaction you are simultaneously buying one currency and selling another. GBP/USD 1.3150 Base Currency Quote Currency While buying the exchange rate tells you how much you need to pay in units of the quote currency to buy one unit of the base currency. In adjoining example you have to pay 1.3150 U.S. dollars to buy 1 British pound. While selling the exchange rate tells you how 0many units of the quote currency you get for selling one unit of the base currency. In adjoining example you will receive 1.3150 U.S. dollars when you sell 1 British pound.

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LONG/SHORT If you want to buy means buying the base currency and selling the quote currency you want the base currency to rise in value and then you would sell it back at a higher price. If you want to sell means selling the base currency and buying the quote currency you want the base currency to fall in value and then you would buy it back at a lower price. FIRST YOU SHOULD DETERMINE WHETHER YOU WANT TO BUY OR SELL. In trader’s talk this is called “going long” or taking a “long position.” Just remember: long buy. This is called “going short” or taking a “short position”. Just remember: short sell.

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BID ASK AND SPREAD Bid is a price at which market allows you to Sell the base currency in exchange for the quote currency. Ask is the price at which market allows to Buy the base currency in exchange for the quote currency. Ask is also known as offer price. ALL FOREX QUOTES ARE QUOTED WITH TWO PRICES: THE BID AND ASK. FOR THE MOST PART THE BID IS LOWER THAN THE ASK PRICE. The difference between a bid and ask price is popularly known as the SPREAD. If you want to sell EUR you click “Bid” and you will sell euros at 1.17415. If you want to buy EUR you click “Ask” and you will buy euros at 1.17455. On the EUR/USD quote in the picture the bid price is 1.17415 and the ask price is 1.17455.

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THANKS FOR READING. You can contact Capital Street FX at +1-949-335-4314 or email us at supportcapitalstreetfx.com THATS ALL FOLKS https://www.capitalstreetfx.com

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