Learn how to trade Forex

Beginners may find it difficult to understand how to trade forex and how to make money in Forex trading.

To explain this, let us consider an example - how to forex trade.

Once you open a forex trade account with a RoboForex, say $1,500, you need to define the upper and lower limit on the chart of the currency pair and decide what you do: buy or sell. If you decide to sell 100,000 pounds sterling at the price of 1.4820, then you send a request to sell. When trading with 100:1 leverage real margin will be a hundred times less than the amount offered for sale, that is 100,000 / 100 = 1,000 pounds = 1.4820 * 1000 = $1,482. This amount will be the maximum margin for the credit transaction, as there are no more funds in your account. 100,000 pounds sterling at the rate of 1.4820 is 148,200 dollars.

Then you notice that during the forex trade the price falls by 100 points, and you decide to buy 100,000 pounds sold at the price of 1.4720 dollars per pound, amounting to 147,200 dollars. The purchased 100,000 pounds is automatically charged from you forex trade account, and the difference remains.

As a result of the depreciation, you have earned the difference between the sale and purchase, that is, 148,200 – 147,200 = $1,000. This is despite the fact that depreciation was only 0.7% (from 1.4820 to 1.4720). Your earnings are 67% of the initial capital of $1,500, which is not bad for one day.

The second method of earning in Forex market is based on increasing the rate of currency pairs - learn how to trade forex with profit.

Let us suppose you opened a forex trade account in the amount of 1,400 cents, and you think that the quote of EURUSD currency pair will rise. You buy 1,000 euro priced at 1.2730 for $1,273 (1.2730 * 1000). This is possible thanks to a loan that allows you to make transactions in amount 100 times greater than the size of you trade forex account. In this situation, the maximum amount available for trading is 14 cent * 100 = $1,400.

After a while, you sell 1,000 euro at the rate of 1.2830, and get 1,000 * 1.2830 = US $1,283.

Your profit is 1283 – 1273 = $10, which is a 71% increase of your initial capital, given that the rate rose by only 0.8%.

Brokerage commission is made up of spread, i.e. the difference between the purchase price and sale price. The examples of earning in online forex trading market do not take into account the spread in the calculation of the percentage change in rates, because it does not greatly affect the results. Leverage can be different: 1 to 10, 1 to 100, 1 to 200 and 1 to 500.

The calculation in the second example would be the same regardless of your account currency. If we consider these transactions follow one another, the profit will be 67 + 71 = 138% of the initial capital. In practice, you can achieve much higher profits, if you correctly use practices for managing capital and risk management in your forex trade.