How to Make Money on the Forex Market?
The best way to
understand how traders make profits on the forex market is to look at
the example of a successful winning trade.
Let’s assume that a trader did analyses and forecast that the pair
EUR/USD would go up:
EUR/USD = 1.1914 (13:00 AM)
Trader opens a long position at (13:00 AM)
Contract size = 1 lot ($100,000)
Leverage = 1:500
Spread = 2 pips
Contract cost = $200
Trader closed position at (17:00 AM)
EUR/USD = 1.2200 (17:00 AM)
Profit in pips = 286 pips – 2 pips (spread) = 284 pips
Profit = 0.0284 * 100,000 = $2840
This clearly shows that the trader has successfully made $2840 in profits from the initial
investment of $200.
The concept of making money on the forex market is quite simple.
Basically, what every trader must always remember is the following:
1) Forecast market changes
2) Open long when you forecast the pair going up and short when you
forecast the pair will go down.
3) Close positions and cash your pips