The basics of online forex trading

Posted by SCM Support Team on 12-Oct-2017 13:13:43

Making money trading Forex

Buying and selling currencies with the purpose of making profits are often called Forex speculation. As a trader, you speculate in a currency either to strengthen or to weaken against a counterpart. That is why Forex is traded in pairs, so-called currency pairs. 

The most commonly traded pair is the Euro against the US Dollar (EURUSD). A Forex trader can either "go long" which means to buy the EURUSD pair speculating that the Euro will strengthen against its counterparty, in this case, the USD. If the trader is correct and EUR gain on the USD the trade is generating a profit, the more EUR strengthens against USD the larger the profit will be.If the trader is speculating that the USD will strengthen against the EUR he will instead "go short" the EURUSD pair and make profits when the price is going down. 

Example for going long EURUSD: If the price is 1.20000 it essentially means the trader is getting 1,2 USD for 1 EUR. If the trader buys at 1.2000 and sells at 1.2100 a 100 pip profit has been generated.

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Topics: education