Forex trading – successfully trade the currency markets

With daily revenue of USD 4 billion, the Forex market (Foreign Exchange Market) is the biggest financial market in the world. Like every other transaction, a Forex transaction consists of a service and a counter service. As a result, currency rates are always shown in pairs (e.g. EUR/USD). E.g. for one Euro,1.3456 USD must be paid. Exchange rates are generally shown up to the fourth or fifth decimal place. In Forex trading the smallest unit is a so-called pip.

Bet on rising Forex rates

  • If the EUR/USD is e.g. 1.3550, in Forex trading you can bet on a rising Euro compared to the US dollar by buying e.g. 50,000 EUR/USD.
  • If the rate then moves to a level of 1.3560, in Forex trading you earned profits of 10 pips, which corresponds to profits of EUR 37.30 (10 x EUR 3.73).

Bet on falling Forex rates

  • If the rate of USD/CHF is 1.0690, you can bet on a falling US dollar compared to Swiss francs by going short with e.g. 100,000.
  • If the rate then falls to the level of 1.0670, you have earned profits of 20 pips, which converted corresponds to profits of EUR 139.60 (20 x EUR 6.98).

Leverage in Forex trading

  • In Forex trading, we trade with so-called leverage. This means that you can trade with 100 times your account balance.
  • In order to execute a 100,000 EUR/USD trade, you do not need EUR 100,000 but only a margin of EUR 1,000 (100:1).

Forex trading is of course very risky. Quick profits in one direction can quickly turn into loss in the other direction. Market participants on the Forex market are very strongly driven by psychology. Bad news on the US labor market can quickly result in triggering movements of 200-300 pips. If an investor is investing in the wrong direction, even with just one 250,000 EUR/USD position, an amount of more than EUR 5,000 can be lost.

This is why the Forex market has particularly high requirements for Forex traders, which they can usually only learn after many years of experience. In Germany, there are approx. 2,000 professional traders who can make a living from trading. With the ayondo Top Traders, you can directly participate in the skills of these professionals.