exchange

Simple steps how to buy and sell currency

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you

today's market allows average investors

to buy and sell different types of world

currencies most of these trades are done

are through the Forex and online foreign

exchange market which is open for

business five days per week 24 hours per

day

with enough knowledge about the market

and a bit of luck you trade currencies

and make money doing it

learning about trading one examine the

exchange rates for the currency you want

to buy based on the currency you want to

sell

look at how values for your chosen

currency pairs have fluctuated over time

currency exchange rates are quoted in

pairs of currency the exchange code

tells you how many units of currency

will receive based on the currency you

want to sell for example the USD or your

quota point nine one means that you'll

receive zero point nine one euros for

every US dollar you sell the value of

currencies frequently fluctuates

anything from political instability to a

natural disaster may cause a fluctuation

make sure you understand that ratios

between currencies are constantly

changing to develop the trading strategy

to make a profit on your transaction

aim to buy currency that you expect will

increase in value using currency that

you expect to decrease in value for

example if you think that currency a

which is currently one dollar and fifty

cents will increase you could purchase a

call contract for a certain amount of

that currency if its value increases to

one dollar and seventy five cents you

have made money assess the likelihood of

big changes in currency values the

better that a country is doing

economically the more likely it is that

its currency will remain stable or

increase in value relative to other

counties factors like interest rates

inflation rates public debt and

political stability can all affect the

value of a currency changes in economic

factors like the country's consumer

price index and purchasing managers

index can indicate that a currencies

value is about to change

three recognize the risks buying and

selling foreign currency as a fraud

prospect even for expert investors many

investors use leverage the practice of

borrowing money to help them buy more

currency

for example if you wanted to trade ten

thousand dollars of currency you would

probably blow at a leverage rate of 200

: 1 you could deposit as little as $100

into your margin account however if a

trade goes sour you may end up not only

losing your own money but knowing your

broker a great deal more than you might

on stock or futures trade additionally

it can be difficult to manage how much

currency to trade at any one time and

when to do so prices of currency rise

and fall rapidly sometimes within hours

for example during one 24-hour period in

2011 the US dollar dropped four percent

to a record low against the Japanese yen

and then rose 7.5 percent for this

reason only about 30 percent of retail

trades the kinds of individual currency

investors make are profitable for sign

up for a demo account and making some

practice trades this can help you

understand the mechanics of the

transactions websites like fxcm allows

you to make mock investments and

currency and practice trading the

currencies with virtual money wait to

trade on the actual market until you

have consistently made a profit on your

demo account buying and selling currency

1 obtain cash in your local currency

you'll need this to conversion to other

currencies free up cash by selling your

other assets consider selling stocks

dawn or mutual funds or take money out

of a checking or savings account to find

the currency exchange broker in most

cases individual investors use a

brokerage service to place their foreign

currency transaction online broker öand

offers a user-friendly retail platform

called FX unity for novices that want to

buy and sell foreign currency the online

brokerage firms for XCOM and TD

Ameritrade also allow you to trade on

the forex market

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three look for brokers that offer low

spreads forex brokers don't charge

traditional Commission's or fees instead

they make money off the spread which is

a difference between how much a currency

can be sold for and bought for the

higher the spread is the more money you

pay to the broker for example a broker

that will buy a US dollar for 0.8 years

but sells a US dollar for 0.9 five euros

has the spread of 0.15 euros before you

sign up for a brokerage account check

its website or the website of its parent

company and ensure it's registered with

the Futures Commission Merchants and

regulated by the Commodity Futures

Trading Commission for start placing

currency transactions with your broker

you should be able to track the progress

of your investments with visual software

or other resources do not over trade or

purchase too much currency at once

experts recommend sticking with

investing between 5% and 10% of your

total account balance in any single

currency trade pay attention to the

currency rate trends before you make the

transaction you have a better chance of

making money if you trade with the

trends and against it for example say

that the US dollar has been steadily

rising in value against the euro unless

you have a good reason to think

otherwise you should choose to sell

euros and buy US dollars 5 set stop-loss

orders stop-loss orders are a crucial

part of currency trading a stop-loss

order will automatically exit a position

I sell off your trade once it hits a

certain price this limits the amount of

loss you take if the currency you

purchased begins to take a nosedive for

example if you are purchasing Japanese

yen with the US dollar and the yen is

currently 120 yen you could set a stop

loss order for a certain price threshold

such as $1 hitting 115 yen the opposite

of this is the take profit order which

is set up to automatically sell out when

you have hit a certain profit for

example you could set a take profit

order to automatically cash out when $1

hits 125 yen this would guarantee you

the profit made from the sale at that

point

six record the cost basis for your

transactions in many countries you will

need a record of this information for

annual income tax filing note the price

that you paid for the currency the price

you sold the currency for the date that

you bought the currency and the date

that you sold the currency most major

brokerage firms will send you an annual

statement that contains this information

in case you didn't collect it yourself 7

limit the amount of currency trading you

do in general because currency trading

is so fraught experts recommend that you

limit the amount of currency trading you

do to a small percentage of your overall

portfolio if you do end up on the wrong

end of the deal is seventy percent of

retail currency trades do limiting how

much you trade and how much of your

portfolio currency trades represent will

help limit the damage

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