How to make money on the market exchange?
How to make money on the market exchange?
Since it may seem a bit complicated to a beginner to really understand how to make money on the forex market, we give you the following example:
You believe that the exchange rate of the euro to the dollar (EURUSD) will increase, and your account you have 2000 USD (fx4u-normal account). At a price of 12750, you buy 150,000 EUR 150,000 * 12,750 = $ 191.250.
This is possible because of credit, allowing you to conduct transactions worth 100 times the amount available on your account (in this specific case, the maximum amount available for a transaction is 2000 * 100 = 200 000 USD) .
After a period of time, the exchange rate will increase. You sell 150,000 euros at the rate of 1.2850 and receive 150 000 * 12850 = 192 750 USD!
So, after buying at a low rate and sold at a higher rate, the difference 192,750 - 191,250 = $ 1,500 is your gain. You have won 75% of initial funds in your account, while the rate has risen just 0.8%.
Another way to make money on the forex market is based on the depreciation of the currency pair EURUSD:
Having created a real account with U.S. $ 200 (same type of account fx4u-classical), you set the upper and lower limits on the chart of the euro to the dollar and you sell 15,000 euros (0.15 lot) to the limit for a higher price of 1.2850 USD (price) for 1 euro, equal to 19 275 USD (15 000 multiplied by the rate of 1.2850).
You have funds in USD in your account, but you can sell euros using the automatic system of borrowing. So the company lends you 15,000 euros free of charge, you can sell by sending a request for sale. Because of leverage, the current installment is 100 times less than the amount sold: 15 000/100 = 150.
At a rate of 1.2850 that equal 19 275 USD. This sum will be a deposit for a credit transaction (marginal) to your account. In this case, the possible maximum deposit is $ 200.
Then during the day, the price drops to the lower limit and you decide to buy 15 000 EUR price of 12750 USD (asking price) for 1 euro, equal to 19 125 USD. The 15 000 that you have purchased will be deducted from your account to allow the repayment of your loan to the company, while the difference will be available on your account.
So, because of the fall in the currency you earn the difference between what has been bought and sold, ie, 19 275-19 125 = $ 150. You could reap 75% (150 USD) of your initial $ 200 USD based on the falling rate of 0.8% (12 850-12 750) in just one day.
The company takes a commission representing the difference between bid and ask prices or margins. Which in the example above is 3 USD (EURUSD margin equal to 0.0002 or 2 pips). More detailed information about the terminology that is in the Glossary .
In these examples, the margin is not taken into account when calculating percentage rate fluctuation because of its non-essential influence on the results. In the case of micro or standard forex e-Global, the calculations are similar with a difference only in the currency of account: U.S. cents USD for micro and mini and standard. The use consecutive transactions shown gives the income of 75% +75% = 150%. In current practice, an even greater return can be achieved through use of methods of money management correspondent. Methods of risk management also play an important role in trade
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