Forex, What is it and how does it work?

FOREX, WHATS IS IT AND HOW DOES IT WORK ? 

What is FOREX?

As already mentioned, FOREX is an international currency market, where people buy and sell the main world currencies: Euros, American Dollars, Canadian Dollars, Australian Dollars, British Pounds, Swiss Francs, Yens, even Mexican pesos.

What time does this market operate?

Forex is open all day, and closes on weekends. That is why it can be operated at dawn, at noon, in the evenings, in any free time.

How do I earn money?

Suppose the Euro (EUR) today trades against the USD (USD) at a value of 1.3207, and I think it will increase its parity, therefore I buy euros. Effectively, the Euro rises and closes at $ 1.3287, where I sell and buy dollars. For such small variations, a minimum of 10,000 euros is purchased (Variations are usually thousandths of a euro, and one thousandth is called PIP).

In the example, the euro rose 80 pips (80 thousandths), and earns 80 dollars less commissions, so it is left at $ 75 net.

What if I feel like it's coming down?

In this case, I sell the Euros (although I do not have them), and when I lower the price, I buy them cheaper. I can sell 10,000 euros in short (sell without having them), and for every pip that goes down, it would earn you a dollar.

10,000 thousand euros? I do not have that much money saved !!

This is where what is called leverage comes in. There are brokers that open accounts with only 2,000 euros, and lend one to the rest. In this case, if I have 2,000 euros and I need to buy 10,000, I borrow the rest and then it is said that I have a leverage is 5 to 1. With that leverage, each pip = 1 dollar. There are brokers that leverage up to 50 to 1, where each pip would be $ 50.

This information is the hook, and all is true. I can operate at any time, with little investment, and have good profits. However, the risks need not be explained and because forex is not for everyone.