You have probably had of forex exchange. Most people simply
point out that they have made money through trading on the forex market without
talking about the how. The question most people ask themselves is whether forex
exchange is just another scam or it is real. Forex exchange is a real business.
It is not gambling nor is it a get rich quick scam. The process is a form of trade on the
fluctuation of currencies. Like other trades, it involves risks with potential
The forex is more about exchange. The traders take advantage
of the fluctuation in values to buy and sell. Money is made when there is a
change in value to the advantage of the currency purchased. The mechanics are
simple and similar to the trading in stock.
The mechanics involve exchanging a currency for another with the
expectation that the value of the currency will increase at the time of sale of
the held currency. The difference that is realized is the advantage gained in
value increase. It is easier to explain how money is made using an example so
let us jump to it.
Assume you purchased 10,000 Euros at exchange rates of
1.1800 between the euro and the dollar. In the transaction, you will need USD
11800 to purchase the 10,000 Euros. After two weeks, the exchange rate changes
to 1.25. If you sell the 10,000 Euros held you will received USD12000 for the
amount. The transaction will earn a profit of USD700 from forex trading.
Considering the example above, you can make various such
transactions of even smaller values. You can trade with small amounts or large
amounts. The frequency of trade and the exchange rate are some of the factors
that reflect the profitability of the venture.
The trick to making money is analyzing information to anticipate
a change in value that will be beneficial to the transaction. It is also
critical that the sale of the currency is made at the right time when maximum
yield can be made from the transaction. The maximum yield is determined by the
The exchange rate is the ratio of the valuation of one
currency against the other. The exchange rate is the fundamental aspect of
analysis in forex exchange. The exchange rate changes overtime with variation
of political, economic, and other factors of a currency. It is often a
reflection of the demand of the currency. Worry no more. Forex exchange trading is legal
and acceptable way of making money.