You would have seen that there are thousands of people who make huge amounts of money through Forex Trading which seems to be a very good way of money making. Many people think that this may be a Fake or Illegal option to make money but believe me its not really Fake unless you perform all the transactions illegally. Lets first understand the Basics of Forex Trading and how the system works.
Forex – Foreign Exchange – Fx
A Forex Trading Market is a Business Marketplace where currencies are traded Online or Offline in real time. When you are selling some currency , someone is buying it making it a complete transaction and people try to buy currencies for a lower price and sell it off for a higher price in order to make a commission which is the main profit from Fx Trading. The Trading can be done 24 hours a day for five days in a week with markets in New York, London, Sydney, and Tokyo.
Its not Easy Money because you need to do good amount of research before you start buying currency and also when you try to sell it off. The currency you first buy is called as ‘Base Currency’ and this is usually in USD[United States Dollars] which is most traded currency ie around 90% overall. The currencies are called as EURUSD, USDJPY, USDCHF and GBPUSD which means that Euro Vs USD currency sales.
One of the most familier reason why people Trade with Forex is because of its highest liquidity which means that when you are in need of money you can sell of your base currency instantly and get the current rated money , where as in other mediums of business its hard to get back the money instantly. 100:1 Leverage – Trading on Margin would mean that you can trade upto 100 times more than what amount of capital you have in your account.
Trading Example :
Last year in January 2008 the USD to INR Exchange Rate was 39.3Rs [Source]
Hence if someone wanted to invest 10,00,000Rs into Forex Trading they would have recieved 25,445 USD for the total money.
Now after a year the scenario is different and in the month of March 2009 the USD to INR Exchange Rate was 51.1Rs [Source]
Purchase – 10,00,000 INR > USD [39.3 Rate]= 25,445$
Sell – 25,445$ > INR [51.1 Rate] = 13,00,239 INR
This means that its around a 30% increase in the revenue from one time transaction , but if you have the time and patience to research then you can get into full time trading and invest in bulk along with regular trading, making less margin per transaction but gaining large with bigger investments. You need to look into all the latest news related to this market and keep yourself updated before you start selling off your purchased currency.
There are several websites which can offer you with free forex trading software’s using which you can buy and sell currency, and they would take 0.5% to 1% brokerage charges on your transactions and this differs for each company.