Forex is derived from the word "Foreign Exchange", which means foreign exchange or currency exchange with each other, the initial objective was to foreign payment.
Due to the difference suply and demand in a given time, resulting in fluctuations in currency values compared to the other one. Difference of average difference between the value of money at a time is then used to take advantage.
Since there was such an understanding was finally traded currencies in a market called forex market.
Forex trading is an activity to Buy (buy) or Sell (sell) currency is continuously and consistently for profit.
Can also be interpreted that forex trading is essentially the currency exchange activities with each other continuously for profit.
Unlike stock trading only benefit if we buy the stock price goes up, the forex trading we can benefit from two directions, either up or down the price it's an example:
The advantage of the price rise:
Price or exchange rate GBP / USD is now 1.5000
This means that 1 GBP = 1.5 USD
(1 GBP (£) if swapped into USD (dollars) to $ 1.5)
Now I have a capital of $ 150.
I predict that the exchange rate of GBP / USD Up
What I do is BUY GBP / USD or buy GBP using USD, in the sense of exchanging my dollars into pounds.
After the exchange, $ 150 I changed to 100 pounds.
After an hour the exchange rate of EUR / USD rose to 1.7000
This means that 1 GBP = 1.7 USD
I need to do now is to SELL GBP / USD or exchange back 100 Pounds which I hold a dollar.
Having swapped my 100 pounds to $ 170 (100 x 1.7)
BUY and SELL of transactions within an interval of one hour before my capital went from $ 150 to $ 170, which means I get a profit of $ 20.
Profit-making prices go down:
Price or exchange rate GBP / USD is now 1.5000
I predict exchange rate GBP / USD will fall.
So what I do is SELL GBP / USD. suppose I want to sell 100 pounds.
Since I do not have the pounds to be sold, the process is me borrow 100 pounds money broker for sale or exchange to the dollar.
Having swapped 100 pounds had been turned into $ 150.
After an hour the exchange rate of GBP / USD fell from 1.5000 to 1.4000
This means that 1 GBP = 1.4 USD or 1 USD = £ 0.72
What I do now is I exchange back $ 150 a pound. So I would mendapatlan 107 pounds.
Now I hold 107 pounds. From 107 pounds, 100 pounds I return to the broker, and the remaining 7 pounds this is my advantage.
From then BUY SELL transactions within an interval of one hour before my capital went from 100 pounds to 107 pounds, which means I get a profit of 7 pounds.
In practice it is not as complicated as explained above, because every broker provides a system that facilitates customers.
Once you predict the price will go up, you BUY. if you did in fact UP CLOSE then you profit. advantage is calculated from the number of points earned multiplied by the number of lots traded.
Similarly, if you predict the price will go down, you SELL, if it is indeed your CLOSE DOWN then you are lucky.
