Forex Currency Converter Principles for Newbies

The purpose of the work at Forex is earning money on currency speculation against one another. Until now, we've talked a lot about the principles of trading at the forex market

LA, CA (prHWY.com) March 24, 2013 - The purpose of the work at Forex is earning money on currency speculation against one another. Until now, we've talked a lot about the principles of trading at the forex market. But questions such as what the initial capital needed to work on the Forex and how much profit can be expected when working at Forex hitherto are not considered in the following article. In this article we will try to clarify the issue dealing with the principles of Forex currency converter system.
Theoretically, the profits can be obtained from the sale/purchase of currency in exchange to other currencies, but the amount of such profits is negligible compared with the earning potential of Forex currency converter system in the Internet.
So, imagine that we have 1,000 dollars, and we want to make money on currency speculation in exchange. Imagine that the U.S. dollar to Japanese yen in exchange of USD/JPY 104.15/106.65. We forecast a growth rate of Japanese yen against the U.S. dollar, and therefore decide to buy Japanese Yen for all our dollars or not. Even newcomers know that the rates of purchase and sale are the base currency quotes, that is, in our case to the U.S. dollar. In this formulation, we are selling dollars, and Forex currency converter exchange buys them. Rate of the buy transaction (bid) is listed first in the quote, so we get: 104.15 x 1000 which will equal to 104,150 Japanese Yen.
If we now sell our Japanese Yen back for U.S. dollars, according to this quote get 104,150/106.65 = 976.56 dollars. That is, for such an operation we tolerate losses, and their size is 1 000 minus 976.65 which equals to 23.35 dollars. What we need to make a profit? It is obvious that we need to sell according to the price in the quote of USD/JPY pair dropped below the original buy price, i.e. selling price should fall by more than 250 points. Note that 250 points is the size of spreads in the quote, that is, selling price should be changed at least by the amount of spread that we at least could return back our 1,000 U.S. dollars. The problem is that the exchange rate at 250 points we can wait a long time (weeks or months) depending on the current state of affairs at the Forex market. But imagine that the exchange rate is still changed by as much as 500 points in the right direction for us, then there was the USD/JPY 99.15/101.65. What kind of income we receive by selling our Japanese Yens? We get 104 150/101.65 equals to 1 024.59 U.S. dollars. But our clear profit from the transaction will be 1 024.59 minus 1,000 which equals to 24.59 U.S. dollars.
In practice, very long wait and exchange rate by as much as 500 points. That is 24.59 U.S. dollars can be our monthly or even quarterly income. Naturally, this is not the kind of profits that we would like to get from Forex currency converter system.
Another thing to note is that in the case of the exchange point - is that for currency speculation, we use exclusively available to us at the hands of money. Of course, nothing prevents us to go and get a bank loan but no bank will give you credit for speculation in foreign exchange market, and would you like to lose themselves in such speculations, most of the loan and run into debt? Within Forex currency converter trading the same things are simpler. Using the principle of margin Forex currency converter trading we can, having a relatively small capital (even a few thousand dollars), control the capital hundreds of times greater than our available really deposited funds.

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Categories: Finance

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