Let's learn Forex

forex trade basic learn


These days a lot of people have to stay at home because of corona issue. So people are interested in making money from the internet.
So I thought I'd talk a little bit about forex.

What's this forex?

Forex is a high-profitable and high-risk financial investment method. Therefore, it is very important to get a good understanding of the basics here.

This is called the forex market. It's like the share market, the stock market. It is also called the fx market and the currency market. When we say market, we are reminded of the market, the supermarket. If I ask you how people make money in the market, your answer is that they sell goods. So how to make money in the forex market? Let me tell you the answer. We are Sell ​​money to make money in the forex market.

The word Forex is made up of the two words of foreign, exchange and shortened. Maybe now you have a little idea about how to sell money at the forex market. We first talked about how people at the market want to make money. If those people want to make a profit, they should buy their goods and sell them at a higher price, and that's roughly their profit,

Profit = Selling price - Purchase price

Let's see how this concept applies to forex.
When one of your relatives is travelling abroad, the first thing they do is to convert some of the money.

For example, if a Sri Lankan goes to the USA. They have to convert rupees to dollars.

So Sri Lankan go to the bank and pay in rupees for the number of dollars he needs.

US $ to Sri Lankan rupees exchange rate = 180.00
How many dollars does he need: $ 1000

So the number of rupees he needs to get  $ 1000 = 180.00 * 1000

= 180000 LKR (Rs.)


Imagine after six months Srilankan came from the USA and he is bringing 1000 dollars back to Sri Lanka. Now he wants to convert dollar ($) to the rupees.

After six months the exchange rates have changed.

After 6 months the US $ to SriLankan rupees exchange rate = 195.00

The number of dollars he has: $ 1000

Therefore, the number of rupees he receives for thousand dollars = 195.00 * 1000

= 195000 LKR (Rs.)

Has he made a profit or a loss?
It's been a profit

Profit = 195000 - 180000 = Rs.15000

In the forex market, what we are doing is retain some amount of lower rate currency and then sell it back to make a profit when it gets a higher rate.


There is a lot to learn in this regard: leverage, pips, lots, mini lots, micro-lots, margins. We'll talk about that in the next lesson.

Comments

Post a Comment

Popular posts from this blog

Forex and Currency

Image
In the previous lesson, we talked about holding US dollars and selling them when the dollar rate goes up. In this example, two currencies were used, US dollars and the Srilankan rupees. In the forex market, the US dollar is known as the USD. Also, Srilankan Rupees know as LKR. From here on, I call the currency their short names. The main thing you need to understand here is that in a Forex trade, two currencies are always used. And the rate is shown as follows. USD / LKR = 170.87 This means to buy USD 1 you need 170.87 Srilankan rupees. Now that if you know the rates of both currencies, you can be able to make any calculation between them. Consider an example. USD / LKR = 109.15 How many dollars can you get for 250000 LKR? Make sure you slove this calculation before looking at the answer. USD Amount = 250000 / 109.15 = 2290.43 $ Now think how much rupees you can buy for $ 1340? LKR Number = 1340 * 109.15 = LKR 146261 I hope you are clear on this.
Read more

Lots, Margins, Leverage and Pips

Image
Today's lesson is an important one. After this lesson, we can look at practicals. So let's get started. In the last lesson, we learned about currency pairs. The currency in front of a currency pair is called the base currency and the currency in the back is called quote currency. It can also be called counter currency. Consider an example. EUR / USD = 1.235 In here, Base currency: EUR Quote currency: USD Okay now, let's see what "Lots" are.  Imagine we go to the market and buy potatoes, so how do we get the potatoes? are we count potatoes? No, we buy potatoes per kg or g. Like that in the forex market, we say unit of currency is a "lot". "Lot" is called a standard lot. A lot is always 100,000. There are lots of mini-lots, micro-lots, nano-lots like gram and kilogram. Lot (Standard Lot) 100,000 Mini Lot 10,000 Micro Lot 1,000 Nano Lot 100
Read more