PROFITING FROM THE FOREX

Profiting from FOREX is done by using margin trading, where a relatively small deposit is required to control much larger positions in the market. Our recommended brokers require a percentage  margin deposit. Therefore, $1000 controls $ 100,000 of trade currency.

Currencies are traded in dollar amounts called lots. One lot is equal to $1000, which controls $100,000 in currency. This is margin. A margin call can occur when your trading account drops below this minimum $1000 per lot traded.

Profiting from FOREX Online

FOREX currencies are traded on a price interest point (pip) system. Each cur­rency pair has its own pip value. The goal of a trader is to capture as many profitable pips as possible. Values are determined by mathematical formu­las and according to the exchange rate of the particular pair. Some pip val­ues are fixed, whereas others can fluctuate slightly as one currency gains or loses strength against the other.

Profiting from FOREX Online
ANALYZING THE FOREX for profiting
The forces of supply and demand determine the values of currencies. Spec­ulation in the FOREX must be based on sound analytical principles. There are two radically different methods of forecasting where the forces of sup­ply and demand are heading.

The first method, known as fundamental analysis, focuses on the actual events that are believed to have caused market movement in the past.

The second method, technical analysis, makes judgments based on the pat­terns and behavior of price data and indicators as they are displayed on charts.

There are several ways to trade to profit from the FOREX, such as charts and graphs and next-generation software. The important thing to note about this is that because the computer does the calculations for you, it does it the same way every time, with no deviations and no emotions. To be successful at trading, you must be able to duplicate success every time– trade the same way each and every trade.

Together with good money management, you only need to be right 50 % of the time to make money. As long as your wins are greater than your losses, you can be a profiting FOREX trader. Good money management will bridge the gap in profiting from FOREX.

Profiting from FOREX Online
PIP MOVEMENTS - Profiting from FOREX
Profiting from FOREX currency price is a little different. For instance, the decimal point is placed differently for each currency. However, what remains the same is how we count pips for each currency from one pip movement to the next. The last digit in the currency price is where one pip moves to the next.

For example, in the Japanese yen (JPY), one pip movement higher is 123.50 to 123.51. For the Euro (EUR), it is 1.0810 to 1.0811. For the British pound (GBP), it is 1.4220 to 1.4221. Therefore, a movement of 100 pips for the Japanese yen (JPY) is 123.50 to 124.50; for the Euro (EUR), it is 1.0910 to 1.1010; and for the British pound (GBP), it is 1.4220 to 1.4320.

Profiting from FOREX Online
LOCK IN PROFITING FROM FOREX
If your option appreciates significantly in value, you can improve your option-trading returns by locking in profits. This is a very simple process; you simply sell the current option, and purchase a cheaper option with a different strike price or maturity.

By purchasing the cheaper option, you would be putting less money at risk, or taking profits. In addition, you would still be able to earn from further option appreciation if the currency market rate continues to move in your favor.

For example, suppose that you bought a 3-month EUR call/USD put option with a 1.0000 strike price when the current EUR/USD market rate was 0.9900. Now, EUR/USD is 1.0500, and you have made significant profits. You still believe that the EUR/USD will appreciate, but you want to lock in some profits.
What you do is to sell your original option and purchase a cheaper option, such as a 3-month EUR call/USD put with a 1.0300 strike price. The difference between what you earned when selling the original option and the new option premium is the amount of profits that you have "locked in." Given that you still own a EUR call/USD put option, you will continue to benefit from further EUR/USD appreciation.

Profiting from FOREX Online
ACCELERATE YOUR FOREX PROFITS
If you have a strong belief in the continued appreciation of your option value, you can increase your option-trading returns by accelerating your profits. This is also a very simple process. All you need to do is to sell your current option and use the funds to purchase cheaper options.

This would allow you to buy more of the cheaper options than you originally owned. This strategy is different from the strategy for locking in profits discussed earlier but is also useful.

For example, suppose that you purchased five lots of 1-month EUR call/USD put options with a 1.0200 strike price when the EUR/USD mar­ket rate was 1.0100 for $3350. Now, EUR/USD is at 1.0400, and your option is valued at $11,690. You still believe that the EUR/USD will appre­ciate, and you want to generate higher returns in a shorter period of time.

What you can do is sell your original option and purchase a cheaper option, such as a 1 month EUR call/USD put with a 1.0300 strike price. With the funds generated from your option state, you potentially could pur­chase seven lots of the cheaper option. If the EUR/USD rate appreciated to 1.0500, the value of your new seven-lot 1.0300 strike option would be $16,425, whereas the value of the five lots of your original option at 1.0500 would only be $15,670.

Profiting from FOREX Online

Don't fear if you think what you just read is puzzling. You will find one option strategy that will work for you and then become good at it. Each strategy is designed for a very specific situation. This is why you need to concentrate on one strategy first. Learn that profiting from FOREX strategy, and then you can use it when the time is right.