Make Money with FOREX

FOREX - How Does it Work?
From: Alex Smith
The UK Make Money Programs Team

Date: 28th July 2010

What is FOREX?

You may be more aware of FOREX than you think. All this term actually refers to is the FOReign Exchange Market and the buying and selling of currencies.

The FOREX that we know of today began in the early 1970’s when worldwide countries switched from the Bretton Woods system to a floating exchange rate – a change that has certainly made a difference to their trading.

To date FOREX is one of the largest liquid financial markets in the world trading $1-$1.5 trillion a day between banks, central banks, corporations, governments, speculators and other financial institutions.

Okay, but how does it work?

The goal to succeeding in this niche is to successfully buy one currency and resell it at a better price.

Unlike the NYSE - where foreign currencies are centralised on an exchange - with FOREX it is much simpler.

Through telecommunications, trading can globally take place 24 hours from 00:00 GMT on Monday to 10pm GMT on Friday, using all major currencies. US Dollars, Euros, Pound Sterling, Japanese Yen… whether you are looking to pay employees on the other side of the world or are interested in speculating, FOREX can give you that freedom.

For many investors though, they prefer to speculate currency prices rather than buy. All they need is $500 to begin with and using marginal trading they can get a credit line and monitor their potential gains and losses.

Marginal trading: “Trading done through borrowed capital and without a real money supply.”

Who is involved?

Like we mentioned above there are a number of different businesses/individuals involved in the day-to-day transactions of the foreign exchange market and each have got their own level of access.

The inter-bank market for example is positioned at the top, and has access to spreads unknown to players outside of the inner circle.

The most important ones you need to be aware of though are the following:

• Inter Banks/ Banks – these bad boys cater for the majority of commercial turnover and speculative trading that occurs every day. From trading on behalf of their customers to trading for the bank’s own account, billions of dollars are traded here daily.

• Commercial Companies – an integral player in this market, a lot of their financial activities come from seeking foreign currency exchanges to pay for goods and services at their global offices. More often than not they choose to trade in fairly small amounts and make little impact on market rates during the short term.

• Central Banks – Similar to the Bank of England, Central Banks use their foreign exchange reserves to help stabilise the market. Whether it is controlling money supply, inflation, or interest rates, alterations in their rates can impact upon FOREX.

• Hedge Funds – Between 70% - 90% of transactions on the foreign exchange are speculative. To explain this process more clearly, all hedge funding actually involves is people/institutions who have got no plan of taking delivery of the currency after they have bought/ sold it on the exchange. Instead their purpose is to speculate over the movement of that currency and the impact it will have.

• Investment Management Funds – these usually involve firms who manage large accounts on behalf of their clients and whom use the foreign exchange market to help them control transactions in foreign securities.

These can either be pension funds or endowments.

• Foreign Exchange Brokers – There are 2 types of retail brokers: retail foreign exchange brokers and market makers. Through them retail traders can participate in FOREX.

How can you make money on FOREX without experience?

Whilst acquiring the advice of FOREX brokers is always helpful, for those of you interested in speculating in the market, you can now do so.

Using a FOREX robot, you can automatically trade using the same secret trading strategies offered by professional FOREX traders. With this software on hand you can sit back, watch and learn.

Whilst of course FOREX offers no guaranteed income, as a novice using these FOREX robots, they CAN help you to generate profits from your currency exchanges.

Is it really that simple?

Like everything in this world, there are 2 ways in which you can approach FOREX and make a profit from your transactions: fundamental analysis and technical analysis.

Fundamental Analysis: Like a broker, fundamental analysis examines the current situation in the currency’s country of origin. Economy, politics, Central Banks interest rate, national unemployment level, tax policies and inflation… each of these elements can inform an investor’s decision.

Once you have this information it can be used to make market predictions and anticipate any other future problems.

Technical Analysis: Used by most small and medium sized investors, Technical Analysis stems from the assumption that all factors which can influence the future of currency fluctuations have already been considered.

In other words, investors work on the basis that the movement of the market considers all factors; that price movements are purposeful and that history repeats itself. With this understanding, they look at the highest and lowest prices of a currency (when they are open and closed), consider the volume of transactions and base their investment choices on what has happened to the currency in the recent past.

Why choose FOREX to Make Money?

FOREX is potentially one of the most rewarding investments currently available.

As with all investments, making money with currency trading does come with its own risks, but the profits you can accumulate whilst using this system can be enormous when you compare it to your initial investment.

Take this scenario for example. You buy the Pound with a 1% margin at the price of 1.49889. Over time you watch it rise against the Dollar and you decide to sell. If, for example, you closed the position at 1.505, you could earn $405 (61 pips), giving you a profit of 40% on top of your $1,000 investment.

Then of course there is the benefit of that due to FOREX’s size, no one can influence the market for their own financial gain. Instead all investors can experience the satisfaction of having equal opportunities to make money through the market exchange.

So what are you waiting for?

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So that’s it! We hope the information we provide helps you achieve your financial dreams, keeps your money from being stolen by make money scams, and enables you to live the life you truly desire!

Best Wishes,
Alex Smith
UK Make Money Programs Team

P.S. Since we announced our endorsedmake money online programs, many people have been sending us success stories almost daily. I want you to know I’ve been personally enjoying reading them all and I’m responding back to as many as I could. This is what inspires me most to continue our work for you, and I’m now asking for all success stories to be sent to me directly, at Alex@ukmakemoneyprograms.com. I can’t wait to read yours!

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