How to Make Money with Forex?

Placing a trade in the Forex market is very easy even if you don't have previous experience with the process.

The main objective of the Forex trading is exchange of one currency with another expecting it's price will change as the currency you bought will increase in value compared with the one you sold.

Let's take a simple example for that:

• You purchased 10000 euros at EUR/USD exchange market with rate 1.1900
• After one week you exchange your 10000 euros back to us dollars with rate 1.2600
• That means US dollar has increased 0.07 against Euro.
• Your profit = 0.07 * 10000 = 700 USD

Exchange ratio means the ratio of one currency against another currency.

How to Read a Forex Quote

Currencies always put in pairs like EUR/USD because in every Forex transaction you are buying currency and selling another.

What Is a Currency Cross Pair ?

• GBP : British Pound
• USD : American Dollar

The first currency to the left is the base currency (GBP) while the other to the right is the quote currency (USD).

In buying this means how much units you have to pay from the quote currency (USD) to buy one unit of the base currency(GBP) and in previous example you have to pay 1.51258 US dollars to buy 1 British pound.

In selling it means how many units of the quote currency (USD) you will get for selling one unit of the base currency(GBP) so you will receive  1.51258 US dollars when you sell 1 British pound.

The base currency is the basis for buying or selling.

Long / Short 

• First you have to determine whether you want to buy or sell.
• If buying(means buying base currency and selling quote currency)then you want base currency to rise in value so you sell it in higher prices.
• If selling(means selling base currency and buying quote currency)then you want the base currency to fall in value so you can buy it again with lower price.
• Long = Buy 
• Short = Sell

Bid / Ask and Spread

All Forex trades have two prices :

• The bid is the price you willing to buy the base currency in exchange with the quote currency.
• The ask is the price you willing to sell the base currency in exchange with the quote currency.
• In general, bid price is lower than ask price.
• The difference between ask price and bid price is called spread
• SPREAD = ask price - bid price

Why Trade Forex: Forex Vs. Stocks

There are approximately 2800 stocks listed on the New York Stock exchange so will you check all 2800 stocks to know which one you will trade on ??

In currency trading, there are some of currencies traded, but market players prefer to trade the four major pairs.

Four pairs are  easier to trade than thousands of stocks, aren't they ??

Here are some of advantages of Forex market over Stocks market:

1- 24 Hour Market 

The Forex market is open for 24-hour. Most brokers are open from Sunday at 4:00 pm until Friday at 4:00 pm , with customer service usually available during this period.

also with ability to trade in U.S., Asian, and European market hours.

2- Minimal-No Commissions  

Most Forex brokers charge no commission or additional fees to trade currencies online or in the phone.

Forex trading costs are lower than other market.

3- Instant Execution of Market Orders 

Your trades are instantly executed under normal market conditions. Under these conditions, usually the price you see when you execute your order is the price you get.

Keep in mind that many brokers only guarantee stop, limit, and entry orders under normal market conditions.

Forex Trading Order Types

4- Short Selling 

Unlike equity market, there is no restriction on short selling in currency market. Trading opportunities exist in the currency market whether a trader is long or short, or whatever way the market is moving.

Since currency trading always involves buying one currency or selling another, there is no structural bias to the market. So you always have equal access to trade in a rising or falling market.

5- No Middlemen 

One of the most problems in exchanges is middlemen and any third party between trader and buyer will cost them extra money "time or fees".

On the other hand, Spot currency trading is decentralized, which means quotes can vary from different currency dealers.

6- Buy-Sell programs don't control market 

How many times have you heard that “Fund X” was selling “Y” or buying “U”? The stock market is very susceptible to large fund buying and selling.

In spot trading, the large size of Forex market makes the probability  of any one fund or bank controlling a currency very small.

 Maximize your Forex Trading profit through new Technical Indicators

3 Biggest Forex Trades by George Soros with Trading Strategies

G. Soros

 Forex trade is the fastest way to make millions of money, but you need to learn which strategy to use and how to make use of indicators. Here, we will learn the exact strategies that George Soros used to earn massive amounts of money.

1. Soros breaks the Bank of England and earns $1 billion in 1 day

 “Black Wednesday” is September 16, 1992, the most notorious forex market event where Soros earned the nickname “the man who broke the Bank of England” because of the transactions he performed together with other traders against the Sterling (British Pound).

They didn’t break the bank directly, but the devaluation of the pound was so bad that Britain had to take it out of the European Exchange Rate Mechanism (ERM).

Britain was in a recession in 1990, the pound (sterling) joined the ERM that year. It fixed the pound’s rate to the Deutsche mark in order to make the investments between Britain and Europe more predictable and stable. But as the political and financial situation in Germany changed during its unification, many ERM currencies were under big pressure to keep their currencies within the agreed limits.

Britain had the most problems: its inflation rate was very high and the USD rate (many British exporters were being paid in USD) was also falling. As it became clear that the pound was not able to artificially withstand the natural market forces, more and more speculators began circling around and making plans on how to profit from this situation.

They waited until the financial situation got as bad as it could naturally get, and then created extra pressure on the pound by selling it in huge amounts. The most aggressive of them was G. Soros who performed this transaction every 5 minutes, profiting each time as the GBP fell by the minute.

Technical analysis and forecasting methods of currency market enabled G. Soros to earn 1 billion USD in just 1 day.

2. Soros earns $790 million, crashes the Thai baht and triggers the Asian crisis

In the year 1997 G. Soros saw a possibility that the Thai baht could go down. So he went short on the baht (by going long on USD/THB) using forward contracts.

His actions were often considered a triggering factor, which resulted in the big Asian financial crisis that affected not only Thailand but also South Korea, Indonesia, Malaysia, Philippines, Hong Kong, and others.

Steps of the strategy G. Soros used in 1997:

1. Soros goes short on the Thai baht.

2. Thailand spends almost $7 billion to protect the baht against speculations.

3. Soros sells all his baht resources and publicly warns people about its possible fall and ensuing crisis.

4. On July 2, Thailand is forced to give up the fixed rate of the baht and it starts to float freely. Thailand asks for help from the International Monetary Fund (IMF).

5. Thailand takes on hard austerity measures to secure the loan from the IMF.

6. Baht falls from 1 USD for 25 baht to 56 baht and Soros gains more than $790 million!

3. Soros gains $1.4 billion from the falling yen

In the year 2011 Japan’s economy was seriously damaged after the tsunami and its economic recovery had been slow. Since then, traders have been waiting for the yen to weaken.  This started to happen at the end of 2012 when Shinzo Abe (then a candidate for the Prime Minister post) publicly spoke about his plans to weaken the yen in order to boost the economy.

Taking into consideration his high approval rating, this was a good signal for the investors to open big USD/JPY deals, betting that the value of the dollar would rise against the yen.

The first one to jump in was Soros who is legendary for his skills of shorting different currencies with high leverages and worldwide consequences. He forecasted the upcoming trend and the Soros Fund Management allocated 10% of its $24 billion to USD/JPY in mid-November 2012. Since then, they have gained $1.2 – $1.4 billion (according to sources close to the Fund) in this deal and the yen is still going down.

Here, we can see how forecasting currency rates can easily make you a huge amount of money in no time with small effort. News and learning markets changes will help besides technical indicators.

Read more: Maximize your Forex Trading profit through new Technical Indicators

Figures Source: forexillusrated.com