currencies are been bought and sold continuously for profits. The
capital markets of forex are present globally and transactions are non-
stop in this forex cash market. Whether its Sydney or Tokyo, one would
find aggressive forex dealers and brokers peering into their computer
screens and on the telephone for minor changes that might affect this
currency trade.
The forex trade is carried out for profits that can be gained by
buying and selling of the currencies. Currencies are always bought and
sold in pairs. Let us take an example to clarify the forex deal
A trader trades in Euros/ Us Dollars. (All figures are samples only)
He purchases 10,000 Euros on Jan 1 when the EUR/USD rate is .9600.
Then he sells these Euros at the market rate of 1.1800. On August 1.
Therefore he gets 11,800 USD. Thereby making a cool forex transaction
profit of USD 2200.
Since all currencies are bought and sold in pairs, one needs to decide
the pair of currency that you would like to do your currency
transactions in. In this example EUR is the base currency and the USD
is called the quote or the counter currency. If you have bought Euros
(simultaneously selling dollars), then you have based your decision on
the fact that Euros may appreciate in the future. Therefore by selling
Euros back into dollars you would be getting more dollars and thus
making a profit.
If your assumption is that the US market is going to appreciate, then
you would placing a SELL Euro/USD. Therefore you will sell Euros while
(simultaneously buying USD). This USD may be sold at a later stage to
book a profit.
Operating in the financial and forex trade, its important to
understand that there are many factors, which affect the forex
dealing. The business market conditions, the political scenario,
threat of climatic disasters or impending farm output increase. All
these factors play a crucial role in the forex markets.
Forex dealers trade on forex trading platform or a session. These are
sophisticated software's, which provide the forex dealers with real
time news and analysis on the currencies that they are dealing in. On
this they execute buy and sell orders and well as stop order. Of
course these are also linked to the forex margin account. Thus it
gives the forex dealers ample leeway to make transactions with a small
investment. The forex trade is competitive market where more credit
worthy that the institution or the dealer, the better their source of
information and quality of data is. Therefore this helps them to make
better deals in the currency transactions and make better profits.
Building Wealth in Forex with Only 10 Minutes a Day!: http://w10minfx.imunity.com/
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