can you profit from buying currencies in FOReX?
I understand selling a currency and profiting but can you profit from BUYING a currency pair?
For example, Buying EUR/USD for a certain amount and coming up with $##.## in profit?
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admin @ May 18, 2010
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Richard,
Awesome question. this is probably one of the biggest confusion that people have regarding the Forex market. Many times people assume that Forex involves the buying of foreign currency like you would get at the airport and then selling that currency later for a profit or a loss. I guess you could do that, but it would be crazy because of the commissions, fees and inflated exchange rates you would pay.
The Forex market involves the buying and selling of currency pairs, such as the EUR/USD that you mentioned. The element that effects the price of the currency pair is the RELATIONSHIP between the two currencies. In this case price can go up if the Euro appreciates or if the dollar depreciates.
There are alot of factors that can influence the relationships between currencies. Geo-political events, consumer sentiment, housing prices, weather, trade imbalances etc. etc. etc. This is actually a good thing because the market is consistantly in a state of ebb and flow, prices rising and falling.
Now the next thing that is pretty cool is that various currency pairs have interesting relationships between each other. For example, as the EUR/USD price goes up the price of the USD/CHF tends to go down. This is called corellation and it is key in a strategy that my clients and I use called hedging. We buy a certain number of each of the two currency pairs and we can make a conservative, consistent return no matter which way the market moves.
A fascinating (and potentially profitable) market to be sure.
Paul
For sure Richard. You can profit from forex. All it is like all form of trading is to “Buy Low Sell High” and pocket the difference minus the spread. OR “Sell High and Buy Low” and pocke the difference. Reverse the process and you fork out the difference. Many people get suck into the Forex pool and some never get out. But in short is yes, you can make money from Forex. But do be prepared to slog it out.
Yes.
You can buy and sell any currency crosses and profit from each trade that you decide to open. It all depends on the trading platform you are in. Some offer more choices and some less. However, the forex market is an extremely challenging environment. The risks are high and it takes a lot of practice to get a feel of it.
If you want to profit from forex play the forex news, like the unemployment rate of every country. the car sales, etc
good luck
The answer may be here.
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