How to make money in Forex market is the most important question for those users who work in the Fx market as a trader or investor and only place an order after studying all the pros and cons can benefit a lot from this market and Forex market is becoming an addictive investment strategy for them. Forex Market cannot be beneficial for all users and especially for those who see don’t see it as an investment but a gambling option cannot fulfill their dreams in this market. The initial result may go in profit for those users who want to play gambling in this market but the final result will always be loss. Finally all their money will end up without giving them anything, neither Forex education nor trading experience. So earning money is possible in the Forex market but if you want to know how to make money in Forex market you must learn trading currencies to make money in the Fx market before trading blindly.
Probability of success is more for the traders or investors who first educate themselves before beginning as a trader. Forex education needs study and time so the traders or investors should be patient enough to complete their education using a demo account before trading with a live account and real money. To educate yourself in Forex Trading, you must be well aware about the terms used in the market to know how make money in forex market . Important terms are explained below:
How to make money in Forex Market
More than 60% of trading in the Forex market is done in the currency pairs. Currencies are always bought and sold in pairs in the Forex market. In the currency pair, one currency is the base currency and the other is quote currency. A currency whose value is calculated in relation to the other is called the base currency and the other one is called the quote currency. The currency pair is represented in the currency quotation, for example, USD/CAD is the currency quotation in which USD is the base currency and CAD is the quote currency. The four major currency pairs are EUR/USD, USD/JPY, GBP/USD and USD/CHF.
Long Buy: Long Buy is a position in the Forex market which is created when base currency is bought and quote currency is sold.
Short Buy: Short Buy is just the opposite position of Long Buy.
Pip: Pip is an abbreviated form of Price Interest Points. It indicates the profit of the Forex traders.
Bid: Bid price is what is decided by the trader or investor to buy the base currency.
Ask: Ask price is what is decided by the trader or investor to sell the base currency.
Spread: Spread is the difference between the Ask price and the Bid price.
Leverage: Leverage is the amount of purchase that you can do with your own money in the Forex market. For example, if you are offered the leverage of 100:1 then you can open a position of $10,000 with only $100 in your account. Greater the leverage, greater is the buying power of the trader or investor. Some brokers also offer a leverage of 400:1. So now you know how to make money in Forex market but keep reading to know more
Stop Loss: Stop loss is the rate of the base currency of an opened position set by the trader or investor. If the rate of the base currency falls as low as the value of stop loss then the opened position of the trader or investor will automatically be cut off. This mechanism is named as stop loss to limit the loss resulting from the falling trend of the market, how to make money in Forex market really depends to your stop-loss strategy.
Rollover: Rollover means rolling on the open positions to the next business day. In the Forex Trading, maximum trade is done using the facility of leverage. Many traders take higher risk and open position that value much more than the current balance in their account so in such cases they do not take possession of the currency. If their open position can earn them profit they can sell otherwise if they do not sell it then their broker transfers their open position to the next business day and this is rollover. The maximum time allowed for the settlement of any open position is 2 days so rollover will not be allowed after this time period.