What is the exchange rate trading?

Currency exchanges, also known as Forex, are the purchase and sale of foreign currencies; It is not done in the literal sense that you could expect. You would not go down to the local exchange office and buy Japanese yen and then bring them up 2 days later for profits, although you can buy a huge amount to make a profit.

Currency trading works a little simpler than that, everything done electronically via a widespread betting broker online and you do not need a lot of money to get involved. When you look at currency exchange values ​​in a travel agent window, they do not seem to change that a lot, but you will also notice that they normally have a number of additional numbers in the required exchange rate . These are the last two decimal places that traders seem to ride or down and what causes the forex market so profitable.

So how does it work? To explain the bargaining process, I use the example of the EUR / USD this is the symbol of the euro negotiating against the US dollar; The currencies are always negotiated by pairs a value of currencies against another. If the price of this currency negotiated at 1.4560, it would mean that 1 euro was $ 1.45. The 60 at the end of 6 tenths of one hundred, these numbers are called PIPS.

The glitches are the terminology of forex traders for the lowest name of a commercial currency and what a merchant specifies mainly. This is where it becomes interesting; You can bet as much as you want on the glitches, for example, $ 1 per pip if the currency has increased price at 1.4570, you would have won 10 pips. Did you speculate that the currency would increase value, then you just gained a $ 10 profit. If you had speculated $ 10, a pip, you would have done $ 100.

Although the exchange rate is still $ 1.45, you would have made profits on the last two decimal locations. If the motto to fluctuate as much as an integer, which, profit, would often be quite substantial, especially at $ 10 a PIP.

The good thing about the propagation of bets is that you do not have to give any of your profits into commissions, the Paris company widespread took its profit at the beginning of the trade thanks to what is called the diffusion. When you enter the commerce, you will be quoted a selling price and a slightly different purchase price; Normally, 1 to 6 pips depending on the currency. When you enter the commerce, you will be these shot of the price in real time, once you have done these pips, you will be Vens and that the prevalent Paris society will already have their profit.

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