Understanding Forex Quotes

FOREX market is the largest trading market in the world and is where you can trade currencies of different countries in the world, meaning  you can buy currencies and sell some other

to receive revenue from currency fluctuations. All banks trades on the exchange market and the value exceeds $ 1 trillion per day. Forex Market is open round the clock so that you can make transactions anytime, including in Romania, including at night (online), except on weekends.

The advantage of FOREX market is trading on margin, that can take advantage of gains (and losses) of investment on the spot market (spot market) but less money invested (even 1% of the amount).

 

Example: the report EUR / USD is 1.2. If the spot market (common market) in order to  buy 1000  Euro  we need $ 1,200, the Forex market we need generally only 1% of the money, the remaining money “we borrow ” from  the broker for an overnight interest rates that are very low.

 

Let’s say now that the report EUR / USD rises to 1.3 and we relied on growth (ie euro bought and sold dollars). Means that the 1,000 euros ($ 1,200 purchase) became

now 1300 dollars on the spot market so I have won $ 100, which represents a yield of 8.3% ($ 100 gain on investment of $ 1200). Forex market gains a little interest but is still $ 100, but our investment compared to only 1% of $ 1,200 ($ 12). This means a return of 833.3%.

 

The difference between how much money you need on the spot market and how much money you need on the Forex market is called laverage. In my example above, if on the  spot market we need all the money (100%) and on the Forex market only 1%, this means that the laverage 100. I saw some time  ago that online brokers offer laverage 200, 400 or even 500. Remember, this is  tricky! Do not necessarily choose the lowest laverage! It is true that it allows you to invest as little as possible and earn as much as possible , but you must consider that it is possible to go the wrong way, in terms of speculation (for example, you believe that EUR / USD will actually increase instead of decrease). In this case, because laverage site was small and we were  greedy to buy , we loose mor. So it is very misleading.

 

Those interested can contact the Forex market companies that offer online trading services and mt4 demo download.

 

 

 

 

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