There are many ways you can earn online, investing in foreign currencies is a quick way of getting high return on investment (ROI). Forex market has a daily turnover of $4trilion eye-popping figure right. Who can trade? Most of the people see forex trading is something that banks or companies only can handle but in reality it is for every individual who has some pretty good knowledge on market and how it moves.
Why I said every individual can trade the market? Because forex trading is completely different from stocks. You might think the risks involved with forex trading is much higher than stocks, yes forex trading is too risky as the market moves in a wild fashion which leads the trader bankrupt. I don’t want to discourage the people who choose forex trading as a second income as you can easily get substantial amount of money from forex trading if you use a little commonsense.
Let me teach some basics of forex trading
I will choose EUR/USD currency pair as it is my favorite pair. Let’s consider EURUSD is at 1.3000, this means 1 EUR = 1.3000 USD
I buy 1000 Euros at this point and keep monitoring the chart and after some time EURUSD reached 1.3010. Now I will sell 1000 Euros.
Let’s calculate how much I earned from this simple trade.
I bought 1000 Euros at 1.3000 means my investment =1000*1.3000= $1300
I sold 1000 Euros at 1.3010 means my return = 1000*1.3010 = $1310
Profit = 1310-1300 = $10
Oh.. Forex trading is a waste of time getting $10 on $1300 investment is really ridiculous, isn’t it?
Here comes leverage option. Generally forex brokers offer leverages up to 1:2000, how it will make earn high ROI. The above example is done with a leverage of 1:1.
Let’s consider a leverage of 1:100 which most traders trade at. Leverage 1:100 means you can trade 100 Euros with just a margin investment of 1 Euro. To trade 1000 Euro I just need 10 Euros of investment. I entered the trading with just 10 Euros or $13 and my return is whopping $10.
Now calculate the return on investment (ROI) which is more than 70%.
This is what most traders do and earn money by just doing for few hours a day. So start trading with a demo account to gain confidence. Once you think you can trade the forex market go for a Live account.
It’s your turn to add more points to this. I know I took this as challenge to if you are trading forex market make our readers more.
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Roy Moses is currently studying computer science at the Open University and working in one of the largest SEO companies in Israel. His greatest love is in the field of computers and technology, which has led him to become a website manager and owner of affiliate websites on the internet. His secondary interests are economics and animals. He is also the author of Live On Blogs Australia on Facebook.