Basics of Forex trading

Forex trading are trade contracts for difference in rates. With the help of this tool, a trader can earn money on a fluctuation of the asset's rate, where the final profit depends on the number of points that the price passes from opening a deal. When making a contract, you do not need to physically buy an asset, it is enough to conduct a digital operation that will be executed instantly at the moment of closing the deal. When trading with Forex, the leveraging mechanism is used. With its help, there is an opportunity for trading, when more money is invested in the purchase of the contract than at the current deposit. This allows, in case of successful trading, to get the maximum profit. If the forecast is not justified, then the trader risks losing all or part of his investment. To make it easier to understand what Forex trading are, you need to study a real example that practically indicates the efficiency of this instrument. To open a deal, you need to select an asset, specify the investment amount, determine the direction of trade and open a deal. For example, you think that the asset EUR/USD at 1.2000 has been overestimated and you should invest $ 100 in its downgrade. If after the close of trading your forecast was justified, and the quotes of the asset are, for example, 1.1980 (the market passed 20 points in your direction), then you earned. The profit is calculated as follows: 20 points * $ 100 of investment = $ 2000. In the event that your forecast was not proved, you risk losing the full amount of your investment. It is recommended to use the stop-loss tool to minimize risks in trading operations and minimize financial losses. The main advantage of Forex trading is that the trader has the opportunity to work with a large amount of assets, and also use the leverage mechanism to increase the potential profit on successful forecasting. You have the opportunity to enter the real financial markets without much capital.