Did you know that you can find a market that is open 24 hours a day? The market is called Forex market and if you go there, you can’t find services, commodities and goods. The Forex market is the place where different kinds of currencies are traded. In every trade, two currencies are involved. For instance, you can sell your Canadian dollars for Euros; or you can pay Japanese Yen for US dollars. Forex rates or exchange rates can change unexpectedly. You need to monitor these exchange rates in order to determine if the price of a certain currency increased or decreased.

Changes in the Forex market usually occur quickly and so it is important for traders to keep track of the market. Political and economic events can influence the changes in the Forex market. If you want to determine whether you’re gaining or losing in Forex trading, this article can help you with the calculations.

The Forex investment is greatly affected by the exchange rate and in order to understand the relationship between the two, you should also be familiar with Forex quotes. Like the currency pairs, Forex quotes can be found in pairs as well. Here is a very good example:

1.Suppose the currency pair is USD (US dollar) and CAD (Canadian dollar)

The Forex quote for this pair is USD/CAD=170.50; this is interpreted as ‘every one US dollar is equivalent to 170.50 CAD. The currency found at the left side is known as the base currency and it is always equivalent to 1. The currency found at the right side is called counter currency. The stronger currency is always the base currency and in this case, the USD. The Forex quote’s central currency is USD and so you can find it in most Forex quotes.

How can you determine if you’re earning profits or not? You can use another example.

2.This time use EUR to USD. Assuming that the Forex rate is 1.0857; in this example, the USD is the weaker currency. If you bought 1,000 Euros, you will need to pay $1,085.70. After a year, the Forex rate was at 1.2083 and this means that the Euro’s value increased. If you decide to sell the 1,000 Euros now, you will get $1,208.30; now, in this transaction, you gained $122.60. What if the Forex rate a year after was 1.0576? This means that the Euro’s value weakened. If you still decide to sell the 1,000 Euros, you will only receive $1,057.60 which means that you lost $28.10; did you get it?

Forex trading involves a lot of risks just like mutual funds and stocks. The fluctuations in the exchange market are responsible for such risks. Low level risks like government bonds in the long-term can give returns but are quite low. If you want to get higher returns, you need to invest in Forex trading but you need to face higher level risks.

You must set financial goals for the short term, as well as for the long term. By doing so, it will be much easier to balance the risks involved and the security. You will be able to conduct your trades with ease and comfort. Make use of all the available Forex trading tools so that you can make wise and profitable trades. After reading this article, you can already calculate if you’re gaining profits or not.

Forex trading is one of the most popular and fastest growing trading methods available. When it comes to active trading, it

is hard to beat currencies and Forex.
In the following are listed some of the benefits of currency trading:

24 hour market
The Forex market is active 24 hours a day because of the overlap between the major markets in Europe, Asia, and the United

States and in the dealing rooms dealers are working in three shifts. Clients have the possibility to place take-profit and

stop-loss orders with brokers for overnight execution. The Forex market opens Sunday 23:00 CET through Friday 23:00 CET,

which gives traders the opportunity to react immediately to market news and hereby determine their own trading hours.

Liquidity
Forex trading has become increasingly popular over the past thirty years. With an average daily volume of $ 1.5 trillion,

Forex is 46 times larger than all the futures markets combined, which makes it the world’s most liquid market.
In the past, Forex trading was largely limited to huge money central banks and other institutional traders. But over the past

few years, technological innovations and the development of online trading platforms, has also made it possible for small

traders to take advantage of the significant benefits of trading Forex.

Leverage
Margin ratios associated with trading currencies are typically higher than those associated with trading equities. This is

primarily due to the higher levels of liquidity within the currency market. Margin trading allows FX market participants to

trade much larger amounts than they have deposited. For example, with a margin ratio of 20:1 and a deposit of 10,000 USD, an

investor can trade amounts of up to 200,000 USD. Trading in large volumes allows investors to take advantage of even small

price movements.

Low spreads
Currency trading offers spreads that are much lower than the ones in the equities market (especially in after-hour markets).

Historically, tight currency spreads of 2 pips have only been available for transaction sizes of 1 million USD or higher, but

today these tighter spreads are also available for investors trading smaller transaction sizes.

No commissions or transaction costs
A currency transaction typically incurs no commission or transaction fee besides the quoted spread. This is in stark contrast

to the equity market, where commissions for stock trades range from 8 to 70 USD or even higher, in addition to the quoted

spread.

Profit potential regardless of market direction
An investor with an open position is by definition long one currency and short another. If a trader believes a currency is

about to depreciate, he/she sells that currency short and goes long another currency. In the currency markets, selling or

shorting is a necessary component of completing a trade. Profit potential exists in the FX market regardless of whether a

trader is buying or selling and regardless of whether the market is moving up or down. In the US equity markets, short-

selling is less common and more difficult to transact due to different regulations and market rules. This makes it more

difficult to make a profit when the stock market and/or the share price for a particular stock is going down.

Equal access to market information
Professional traders and analysts in the equity market have an important competitive advantage in comparison with the

individual trader as they have access to important corporate information, such as earning estimates and press releases,

before it is released to the general public. This is in stark contrast to the Forex market, where pertinent information is

equally accessible to everybody, ensuring that all market participants can take advantage of market moving news as soon as it

becomes available.

No Restrictions
No restrictions apply to the Forex market and there are very low account balances. This means that traders can enjoy profit

opportunities in all market conditions.