How to make money trading online?

Trading Online

Good investors are known for being able to trade almost any currency. They require only a financial capital so they can start trading in the forex. The process of making money by doing so, doesn’t  have written rules.  You forecasting that the value of one currency will go up and another will go down.

Currencies are traded, and priced, in pairs within the forex. Here is an example how that works: you see a currency quote for the EUR/USD pair for 1.2131, so the base currency is the euro and the U.S. dollar is the quote currency. The base currency is worth one unit in all currency quotes cases and the quoted currency is the amount of currency the one unit of the base currency can buy. And in the example above, 1 euro can buy 1.2131 U.S. dollars. By making an appreciation of the value of the quoted currency, or by an appreciation for the decrease in the value of the base currency is how a good forex investor can make money.

Or, here is another way to look at currency trading. It is to think about the position an investor takes on each currency in the pair. The base currency that you are “selling” can be thought of as a short position and it`s used to purchase the quoted currency which will be the long position of the currency pair. In the example that we gave you above, you can buy with 1 euro – 1.2131 U.S. dollars and the other way around. To purchase the euros, the investor must first go short on the U.S. dollars so he can long on the euro. The way for the investor to make money out of this is to sell back the euros when their value appreciates relative to the U.S. dollar.

Here is another example:  we assume that the value of the euro appreciates to 1.2141 U.S. dollars, on a lot of 100,000 U.S. dollars the investor will gain 100 U.S. dollars ($121,410 – $121,310) if he or she managed to sell the euros at this exchange rate. The other way around, if the EUR/USD exchange rate drops by 10 pips to 1.2121 U.S. dollars, then the investor looses the 100 U.S. dollars ($121,210 – $121,310).