How to trade and make money through Forex
For making capital with forex trading, there are many ways apart from only buying and selling. As a beginner, you need to know all the ways to earn money with the FX market. Apart from trading the currency pairs, there are three more popular ways that can help you as a beginner.
Want to explore all the profitable ways of earning through forex? Read this complete guide and know which method is comfortable for you. One thing you need to know is that every trading strategy has its own pros and cons. So, keep reading and take note of your favorite method to make money through forex.
Trading forex with basic leverage concept
Leverage is not itself a way of earning money from FX but it's very useful for both beginners and expert traders. When you were reading about trade forex, you must have read that most of the forex brokers let you leverage the amount to a level. For example— most brokers offer 1:100, 1:50, or 1:30 ratio.
This is not the way to generate capital but it can help you gain more profits from the market. For a better perspective— If you have $150 in a trading account and if the price increases by 4%, you will make $6. The profit also depends on which trading platforms you are using for trading the pips.
Let’s Take An Example:
Looking at the other way, if you opt for 1:50 leverage, you can open your position at $7,500 and make a profit of $300.
Most of the beginners don't use this concept as per your budget and end up in a loss. This is because the leverage works on both sides— high profits and high losses.
In case you opt for leverage of 30% and the prices go down, you will also face a loss of the same percentage. So this is among the basic yet effective ways of earning forex money if you use it well. In this case, make sure you research about the currencies well that can justify the leverage risk.
Trading real currency pairs
This is the common way most of us will use to make capital from this currency market. The trading terms means you buy for something at a low price and sell it at a high cost. So, in this way, the total difference between the buy and sell points is your profit.
In this method, there are two kinds of methods you can follow: long position and short position. The above you read is a long position and it's a profitable way of earning. In a short position selling— you sell currency or a stock at a high price and buy it at a lower price. And the difference between the sell and buy points is your benefit using a trading platform.
A Simple Example To Understand This
Example— You are at a restaurant and watching a movie on a tablet. If a person urges you to sell your tablet at $1000 as he has an emergency, you agree. After something, when the work of that person is complete and he doesn't need it now, you offer him a buyback offer of $850. The person agrees and you make a profit of $150.
One way to do this is to trade the pairs by knowing the market trend. In which you follow the market direction, also known as trend trading. When an uptrend will come, you will buy and you will sell in a downtrend.
The contract for difference forex method (CFD)
This is among the most common online forex trading strategies you will hear or read over the Internet. This method is available for markets including currencies and commodities. In this method, you are an owner of none of the currency or stock you are trading. In this, you need to guess the movement of your favorite asset— if the price will go high or low. With this method, you earn profits on your difference among the actual price and guessed price.
You gain a profit with the difference in the price of the stock or currency. You trade CFD with a margin in which you need to give a percentage of your trading contract whether you win or lose. The forex broker will bear the rest of the cost of the contract. For example, you buy a currency pair of EUR/JPY and you put your $600 in this. If the price goes up to $660, you will earn a profit of $60 minus the broker's commission.
It's like the CFDs but here you get a chance to own the commodities that you traded. In this method, the broker will give you the underlying assets to you if trades work in your favor. This is a popular method among expert forex traders. In this method, there are two strategies— first is call and the second is the put. If a trader thinks that a stock's price can go high, they will seize the price. They will seize the price point at which they will sell it in the future. In the put method— the forex trader will predict a drop level in the price and sell the stock at that level.
Forex Options Strategy
Simple & Best Forex Options Strategy Sample
For example— A trader will set the buying price of JPY/USD at 1.15 in the hope of price increase. If the trader's guess comes right and the price goes beyond that level like 1.25, he can activate it. As the price has met the trader's expectations, they can sell it for 1.25 and get the profits.
In another way, if the price of that stock or currency goes down to 1.09, then the trader will wait for this offer to expire. In this way of making money through the forex market, you need to pay a fee to the option seller. Even if you didn't activate the offer, you still need to pay a fee for that currency trading.
Binary forex trade options
The trend of binary trading options is going high from the past few years. This is because it requires the least trading knowledge to make money through forex. In this way of trading, you guess where the price movement of the stock will be. If a trader has bet his money that the stock's price will expire at a positive price, and if this happens— there will be profit. And, the trader will lose the money if the offer expires in a different direction.
This forex method is popular as traders can earn as much as 65% of profits. This is an easier forex strategy and the learning curve is low. If you are not interested in technical analysis, or fundamental analysis, you can go for this.
Profitability in forex trading as a beginner
The forex industry holds a high potential of earning a massive amount of money. But first, you need to draft your own forex strategies and methods to trade. It is not necessary that one strategy work for others will also work for you and vice versa. So, start with a demo account and then start with small capital. Test your methods and start increasing the capital as per your risk appetite. Take your strategy a level up by using trading signals and don't miss an opportunity. Check out our free forex trading signals and start trading now.
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