Anatomy of a Forex Trade:
Forex trading involves speculating on the comparative value of two currencies, or “currency pair”.
When you go long (buy) EUR/USD, you are speculating that the Euro will go up in relation to the US Dollar.
If you happen to be right, you could sell it later on for a profit once the Euro has increased its value compared to the US Dollar.
If you choose to go short (sell) GBP/JPY, you are hoping that the price of the British Pound (GBP) will drop in relation to the Japanese Yen (JPY). We are concerned exclusively with the relationship within the currency pair. The GBP may be rising in value versus the US Dollar, but falling in value versus the Yen, which is all that the GBP/JPY pair is concerned with.
Currency prices in Forex are affected by economic and geopolitical news.
High leverage Margin trading:
In Forex trading we use very high leverage to amplify the effects of the tiny moves of the international currencies market. In the US, for example, you can trade up to 50 times the actual amount of money you have in your account. In other countries even higher leverage is allowed.
This provides very profitable trading opportunities in Forex trading, but also sets up the stage for the need to carefully control your risk, best provided by our Automated Money Management, so your account is never over-trading. Good money management is crucial to successful Forex Trading.
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