How To Make Money On Forex

During the last 10 years, global changes have taken place in exchange trading. Thanks to the swift development of Internet trading millions of private investors have the possibility to get profits on the financial markets which were accessible only to banks and large corporations before. After introducing the mechanism of leverage trading the international currency market Forex became the most popular trading market in the world.

The key principle of this market is simple. You can get income from fluctuations of world currencies by making transactions with the sums which exceed your deposit 50, 100, and even 200 times! A remarkable example of successful leverage trading was done by George Soros in 1992 when after two weeks of work on Forex he made the net profit of $1,000,000,000 by selling the US dollar against the British pound and the German mark.

How to make money on Forex? Let's examine the real trading situation which happened on May 17, 2004. For example, you have $2,000 on your trading account. The brokerage company gives you the right to use 1 lot (100,000 of the base currency) for each $1,000 of your deposit, without taking any commissions for this loan. You open the position to buy euro against the dollar in the size of 1 lot (i.e. 100,000 EUR) at the quote level of EUR/USD 1.1792 (entry point to the market, shown on the chart with (1)).

In two days euro grew in price to 1.2061, or made 269 pips! If you exit the market at this moment (point (2) on the chart) and close the position, your net profit, in this case, will be 2,690 USD! You have more than doubled your trading account within two days only!

Now you can see why Forex is the most popular currency market in the world.