How to make money on the Forex market?
How to make money on the Forex market? that is the question.In order to make money in Forex market you have to buy low and sell high quite simple.let’s have a look at the example: How much money can you theoretically make by trading currencies?
Let’s assume that you have 1,000 U.S dollars in your trading account.The current exchange rate of Euro vs USD is 1.25.In other words, for 1 euro you get 1.25 Us dollar.
You Forecast that during the day euro will rise against Us dollars.Based on this forecast you buy 800 euros for your 1,000 dollars.Your forecast is correct! Euro rise from $1.25 to $1.26.Being in the profit you decide to close the trade and exchange 800 Euros back 1,008 us dollars.In effect, your profit from this trade is $ 8.Not that much, right?
What is Leverage?
Would it be possible to increase profits.In order to maximize your profit potential you can use leverage.Leverage is a loan Tick mill provides you to trade Forex.The size of the loan can differ but trick mill provides you with up to 500 times more funds than your initial capital, which also increase your profit potential 500 times.Great, right?, still please remember…Increased leverage means not only more profit potential but also more risk!Managing you risk is important.
Example,How to use Leverage 1:500, You have the same 1,000$ on your account and you estimate that euro will rise vs the dollar there for you decide to take the biggest possible from your broker 499,000 dollars.Now with exchange rate of 1.25 you exchange all your 500,000 dollars to 400,000 euros.At the moment when exchange rises to1.26 you exchange 400,000 euros back to 504,000 Us dollars.
As result, you now have 5,000 dollars on your account after returning the loan to your broker.So your net profit $ 4,000 and that is an incredible result after just one day of trading!
In this example we have looked at the scenario when your forecast turns out to be correct.But what would happened if instead of rising Euro had fallen against Us dollar?In this case your trade would be open until your losses equal your initial deposit, which is 1,000 dollars.At this point your trade will be automatically closed and broker takes back the loan.
Consequently a case when you lose broker’s loan is almost impossible.Taking everything into account, you now have seen how leverage can maximize your profits, if you make the right decision.At the same time, leverage can also works against you if you make the wrong estimations and don’t limit your losses.
Let me tell you why i trust Tickmill:
Tickmill like to see the clients succeed in trading your funds are safe and segregated Tickmill’s low Forex spreads increase your profitability you can test your trading skills on global market with a small initial deposit of $100 you can use leverage of up to 1:500.
Tickmills allows all trading strategies including scalping, news trading, arbitrage and executes trades in extremely short time.This is Tickmill is highly respected in Forex community.