Turning Forex Trading Into Additional Income Source

Forex Trading is the subject of the following article. This informative piece is a very concise piece by blogger and online marketing consultant Agnese Geka:

With the uncertainty of modern times, many people are realising that they need to take charge of their own financial situation and ensure that they have adequate income for their current needs (and wants) as well as preparing for the future. Forex trading can be an excellent way of earning an additional income.

What is Forex Trading?


Forex is short for Foreign Exchange. Forex trading is the practice of buying one currency (e.g. dollars) with another currency (e.g. pounds).

Who Undertakes Forex Trading?


Picture from freedigitalphotos.net
Most Forex trading is undertaken by companies to facilitate international trade and to provide stability when managing their finances. A typical example of this would be a company which wishes to import goods from Japan to sell in the United States. By buying Japanese Yen in advance and paying in the local currency, the US company knows exactly what the exchange rate will be. They can then proceed to make future plans and projections without having the added complication of potential exchange rate fluctuations.

Banks are also major participants in Forex trading. In addition to the fact that their customers may want (or need) to make purchases in international currencies (such as tourists buying souvenirs with their credit cards) and rely on their bank to facilitate this, they also use the currency markets to make additional profits for their shareholders. Finally, institutional investors (such as hedge funds) and private investors trade in currencies in the anticipation of making a profit.

How Does Forex Trading Actually Work?


Traders take loans in currencies linked to countries where interest rates are low and use the money to finance loans in currencies linked to countries where interest rates are high. The difference is the profit. The reason why Forex trading is popular with people looking for a regular income is because interest is calculated and settled at the end of each business day rather than every month (or even every year) as with some other forms of investment.

The classic example of this has been buying Japanese Yen (where interest rates have been held at zero for many years due to government policy) and using them to finance loans in countries such as Australia where a strong economy fuelled demand for credit and hence created higher interest rates.

Where is Forex Traded and How?


Unlike equities, Forex is traded 'over the counter' i.e. via computers belonging to traders across the world rather than in specific exchanges. This means that while specific equities can only be traded during the working day of the exchange where they are registered, currency can be traded 24/7, five and a half days a week.

Most trading on the Forex market is what is known as 'spot trading'. This means that trades are based on the price at the actual time of the trade. There are two other markets known as forwards and futures, both of which are essentially agreements to make a trade at a future date. These markets are more complicated and therefore more specialised.

Understanding Currency Quotes


A typical currency quote will look like this:JPY/AUD=123.456. The currency on the left (in this case Yen) is the base currency and the currency on the right (in this case Australian Dollars) is known as the counter currency. The number after the equals sign shows how many units of the counter currency are equal to one unit of the base currency. In short, 1 Japanese Yen will buy  123.456 Australian Dollars.

In reality, when trading on a currency exchange, currencies are likely to be quoted like this:

JPY/AUD=123.456/7

This is shorthand for saying that the bid price (used when selling) is 123.456 and the ask price (used when buying) is 123.457. The first currency quoted is always the currency in which the trade is being conducted. Hence, if a trader wishes to sell Japanese Yen, they will receive 123.456 Australian Dollars for every Yen they sell. If they wish to buy Japanese Yen, then they will have to pay 123.457 Australian Dollars for every Yen they wish to buy.

What are the Risks of Forex Trading?


The big risk of Forex trading is that many Forex brokers allow their clients to buy on leverage, i.e. using money loaned to them by the broker. This means that traders can realise much greater profits when they make good trades, however there is the potential for significant losses if a trader makes a mistake. There are two ways to manage this risk. The first is simply to refrain from using leverage and to trade on available funds only (as in the equities market) and the second is to ensure that trades are placed with a 'stop loss' order which does what the name implies and ensures that a position is sold if a certain level of loss is reached. (Both of these strategies can be used together).

What are the Benefits of Forex Trading?


The main benefit of Forex trading is the liquidity of the market (as compared with the trading process for other assets such as equities, bonds and property). This liquidity means that intelligent traders can make regular profits, leading to a reliable source of income. In addition to this, if the currency itself increases in value, then traders can make substantial gains. The key to using Forex trading to create a regular income is to understand that it is an activity which requires attention. It is about making good decisions time after time and reaping the rewards of dedication and perseverance.


Article submitted by Agnese Geka – a blogger and online marketing consultant for www.SurveyCompare.net, which is providing advice and latest updates on work from home topic for anyone who is looking for extra income sources. 
For latest updates follow us on Twitter/surveycompare .

32 comments

Financial Services Training program said...

Whatever work you have to do, like trading, business, you need some finance for that and that will helpful for any business start up. financial services are much more helpful to do any work.

Fatema Khatun said...
This comment has been removed by a blog administrator.
Yasmine Wilson said...

Hello,

I am Yasmine, a member of some financial communities and a financial writer. I found your site (multimillionaireroad.com). I have contributed many articles for many financial sites/blogs. I want to send you a guest post for your site. My article will be unique, informative and relevant to your site.

I'll send in words format or .txt as an attachment.

May I send my article?


--
Thanks & Regards,
Yasmine Wilson

international financial advisors said...
This comment has been removed by a blog administrator.
Jhon Bedin said...

Seeing Depth of Market - Best available bid/ask prices and market volume.

Jhon Bedin said...

Capital One Forex offers easy and secure facilities to perform online deposits. Our trading environment supports multiple currencies and a wide range of payment methods such as MoneyBookers WebMoney, credit and debit cards and Bank Wire transfers.

John Klovt said...

This was a good suggestion that you put up here...dude…..hope that it benefits all the ones who land up here. 

Trades Jobs

nancy john said...

Good information about forex it is very helpful for peoples

Success in Forex

John Smith said...

Hi...!
This is nice Post Prime Trade FX provides
the best and easy learningForex Trading

sanam arzoo said...

Great info. Thanks for providing USA such a helpful info. sustain the great work and continue providing USA a lot of quality info from time to time.Finance Credit Investments

Stven Lerson said...

Interested in marketing your firm's items by means of the world wide web? Then you can certainly start generating your web site. Promoting your hobby to people who find Millionaire Society themselves interested is one sure strategy for earning money online.

nancy john said...

The sign is actually created both by the people analyzer or perhaps the automatic Forex trading program offered to your prospect on the foreign exchange sign services

Costs Of Trading

Thomas Braylen said...

The actual income mark control section is actually an amazing tool in addition to especially working out video lessons will assist you to allow you to get installed and operating inside seeing that short a time as it can be. make money

S R Jakey said...

Instead, seek to work out how to do it greater. That may make you a good innovator. It make moneyturned out Henry Frd who understood vehicles could be manufactured efficiently by having an assembly collection course of action.

nancy john said...

I like their forex-copy system. You can copy the trades of successful traders and earn money even if you're newbie. And I'd like to say that their trading conditions are very suitable for me. Spreads are good, I choose 1:600 leverage, no requites

Costs Of Trading

Avery James said...

Thanks for sharing the information about Forex Trading. You did a great job . Your topics is really important for all people.
historical option prices

Petru Khan said...

Forex No Deposit Bonus currency trading is the brand new pattern of investing in market place that isn't going to need purchasing stocks and shares and speculating with regards to all of them.

Morgan said...

This is often a singular idea that truly makes the investment safer and protects your cash. There would be no losses and solely gain. you only need downloading the offered tool and you're sensible to travel. you do not need any ability or expertise so as to be a monger. All you need doing is to start out paying attention of the trend and follow the mercantilism signals,for more information click here Forex Demo contests News

nancy john said...

The Forex trading sign can be a advice intended for entering any buy and sell using a currency exchange pair, generally in a distinct value in addition to occasion.

Forex Trading strategies

Sasha said...

I thoroughly trust the binary options brokers from ‘OptionsBee’ as they are highly experienced and helped making huge investments in a risk-free manner.

kevin yong said...

Options OAS trading is offered by which Spread Betting firms? You'll find just a few of spread betting firms who now offer options trading. IG Index gets the biggest variety of options letting you trade on some commodities, equity indexes and important currencies.

nancy john said...

The Forex trading sign can be a advice intended for entering any buy and sell using a currency exchange pair, generally in a distinct value in addition to occasion.


Forex Trading software

David Dark said...

First time visit on your blog really that was superb and amazing information on your blog. Thanks for sharing about OAS App.

EA Builder said...

Definitely an introductive post here when it comes about forex market. Still I would like to say that if someone wants to make real money from forex market than a full time devotion is needed. Making some extra cash with forex market is only 'the beginning'.

Best regards,
http://www.ea-builder.net

Forex Guide Helpful said...

This article is very helpful and i like it! All traders should know this informations when they start to do this kind of investment. I personally used a demo account and a guide!

top launch review said...

First, thank you for your helpful information in the field of currency trading, you often hesitant before entering this area, but after that I found your site change everything, can you tell me Are these programs located on this site you actually work? http://www.toplaunchreview.com/

nancy john said...

Forex trading is open 24 hours a day and therefore you need to ensure that the forex broker that you choose operates at all times of the day. 

online Forex Firm

Semaj Hawley said...

Forex is all about risk analysis and probability. There is no single method or style that will generate profits all the time. The key to success is positioning ourselves in such a way that the losses are harmless, while the profits are multiplied. Such a positioning is only possible by managing our risk allocations in accordance with an understanding of probability and risk management. Forex Trading

totala ratyy said...

The Forex market seems like the perfect place to get rich quick but this is not so. In fact, just as many people have seen their savings go down the drain in this market because of uneducated decision-making. The possibility of earning a lot of money in this industry is high but the risk that comes with it is equally as high. Beginners in forex trading often fail the first time they venture in the market because they didn't put in the time to learn the ins and outs of the industry before investing in it. Here are some tips for beginners: forex for beginners

nancy john said...

The sign is actually created both by the people analyzer or perhaps the automatic Forex trading program offered to your prospect on the foreign exchange sign services.

Learning Forex investment

Forex Broker said...

Actually I was looking for exactly this type of blog post! Forex trading is a big business and I need to learn a lot about it. Therefore whatever shared here is very educative for me and glad to learn how Forex is actually works. Thanks.

nancy john said...

I have been trading with forex since 2010 and never encountered any issue. I made money once and requested withdrawal

futures stocks Trading