Investors and traders make money from forex trading by buying one currency respectively selling the other. Currencies expected to gain value are bought due to the traders’ judgement and those expected to lose value are sold.
Every trader gets to the market to trade with a motive of make a profit.
Markets involve buyers and sellers and the process of carryout transactions between buyers and sellers enable traders to make money; so does in forex markets.
Unlike the other markets,in the foreign exchange markets you buy and sell currencies. It involves speculating that the value of one currency will increase relative to another.
As we had discussed previously, Currencies are traded, priced and paired. E.g, EUR/USD at 1.11433; one on the left being the base currency and on the right being the quote/counter currency.
The base currency is worth one unit and the counter currency is worth the amount that one unit of the base currency can buy.
How to make money from forex trading.
In order to make money from forex trading, you either buy the base currency respectively selling the counter currency or sell the base currency respectively buying the counter currency depending on the position you choose to take on each currency in the pair.
The base currency is the basis for a buy or a sell. For example if you buy the EUR/USD, that simply means that you are buying the EUR while selling the USD simultaneously. You believe that the EUR is appreciating/adding value relative to the USD and if it moves as you have predicted, you are making a profit. On a sell of a EUR/USD, the EUR is losing value relative to the USD, and if it goes to your direction you make a profit. When you buy, we say you are going long and when you sell we say you are going short. In forex trading you make money by buying or selling a currency pair and it goes as predicted.
How long you should hold an open position, is a personal thing for all traders. The decision is all yours. You know what your goals are as a trader, the kind of strategy you use to trade. All this starts from what you are? and What you want? If I am to answer, this...