Currency exchange is basically all about changing one currency into another. Arguably, the most sought-after currency for exchange is the US dollar. This is hardly surprising when you consider that money changers around the world accept the US dollar and convert it to the local currency and vice versa.
Also, the common currency used in international business dealings, no matter what the industry, is the US dollar. For better or for worse, a currency exchange in favor of the US dollar has made international business possible. But did you know that the US dollar is not the only strong currency you can buy? And did you know that you can make money buying and selling currencies?
Buying and selling currencies for profit is also known as forex trading or FX trading. How does it work?
When you sign up for an account with a forex broker, you get access to a platform where you can buy a currency pair like the USD/GBP or GBP/USD. The first symbol indicates you are buying British pounds with the dollar and the second symbol tells you are buying US dollars with British pounds.
Just like in any type of trading, you make money when you buy low and sell high. If you have ever gone to a money changer, then you already know that the forex rates vary daily.
But how do you track the price movements? You can download the free MT4 forex software, which tracks different currency pairs in real time. The only thing you need to do is add a currency pair to the software. Click on a button to do this.
How do you use the MT4 software to make a profit in forex trading? You need to monitor the chart of your favored currency pair and analyze whether or not the price is going to go SIGNIFICANTLY go up or down. You might think this is easy to do, however, nothing could be further from the truth, and the most experienced and profitable traders spend countless hours doing a technical analysis before making a trade.
If you are very new to forex trading and you still want to make a profit in the currency market, you can still make money by doing social trading. Social trading just means copying the trade of the more experienced traders – if they make money, you also make money. And if they lose money, you also lose your investment.
But you don’t need to worry about losing out, though. Social forex trading platforms like eToro have a list of the most profitable traders and the traders that are most copied on their platform.
The idea is that when a lot of people are copying, the trader must be doing something right.
For us, though, a good plan of action is to copy trades only in the beginning. While you are piggybacking on the expertise of other, you should hone your technical analysis skills and test them by doing trades in your practice account.