How to Make Real Money With Forex
Wednesday, July 23, 2008
How is it possible to make money by trading in the Forex market? Two words: Marge trade. Margin trading is trading using borrowed money.
As you remember the first part, Forex is traded in lots, usually $ 100000. So you can not for example, buying a cent, or even five hundred units of any currency. Some dealers May Offer Forex Mini-lots, which are $ 10,000 - Micro-or lots of $ 1,000. Fortunately, you do not need to have $ 100000 lying to start a Forex trading.
Margin trading is widely used in Forex trading. The broker is paid a margin of safety, which is generally between one quarter of one percent and five percent. You will then have control over a much larger sum of money. To negotiate a batch of $ 100000 you will need a margin of $ 1000 for the broker. You will need more than your account Forex, of course, if the trade does not work well for you.
Saying that, at ten o'clock in the morning, you sell $ 100000 USD and buying euros. At this point, you will pay $ 1.4725 per euro, which means you'll be able to buy 67912 euros. Your Euros then valued at $ 99,967 (you lose $ 33 supply / demand spread). You can then close the trade 5PM and sell euros and buy U.S. dollars. You will get $ 1.4770 per euro, you compensation $ 100306. This will result in a profit of $ 306 for the day.
Margin trading is a form of leverage - where a small amount of money is used to leverage or control, an amount much larger. Trading on margin, you can lose money or tiny changes in the relative value of currencies on the Forex market.
For trade in this way, you'll need more than the amount of margin in your account Forex. In the case in the paragraphs above, you will need to have been more than a thousand start, otherwise you would have a negative amount in your account Forex.
Say you started twice that in your account Forex. Again, $ 100000 USD is sold and bought Euros in the morning. Your used margin would be $ 1033, leaving a margin of $ 967 in your account. Now suppose that trade is bad for you. At noon, the citation is EUR / USD = 1.4578/1.4583, making 67912 Euros that you purchased earlier valued at $ 99002. Your margin would be usable only $ 2, and your job is automatically c; closed to prevent your account to go into the red. Therefore, you lose $ 1,998.
Now suppose you had $ 3000 in your account and your business could have continued. If things had kept going badly, and a subpoena was PM: EUR / USD = 1.4570/1.4575 your Euros would be worth $ 98948. Your margin would be used $ 2052, $ 948 left in your account. You can then its activities, and hope for the euro to recover against the U.S. dollar. If that happens, and five by citing PM: EUR / USD = 1.4770/1.4775, then you can sell your euros and a profit of $ 306 for the day.
You should try to have at least two times your line of your account forever. The best movement, if possible, is never to trade with more than 10% of Forex your account at any given time.
Margin = Percentage 100/Leverage
Lever = Percentage 100/Margin
Labels: Make Money
posted by Master @ 2:58 AM,