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Along with investments in the stock market, investments in gold and valuable works of art, foreign currency trading is the most frequently used form of alternative asset growth. Many investors ask themselves the question "how to make money on currencies?" therefore, we will try to bring you closer to the basics of the functioning of the currency market. Also on the site ru-trade a lot of news about Forex, information about earnings and so on.
Investing in currency does not require, at least at the initial stage, special knowledge and high financial costs. However, it is worth knowing that this part of the financial market is characterized by a low margin (earnings per unit of currency) and the volume of transactions (the more units exchanged, the more profit) is of great importance for the amount of profit.
How to invest in currencies to maximize your profit?
We make money by buying currencies at a certain price, and then selling them when the exchange rate reaches a value higher than the purchase price. To do this, first of all, we must clearly define for ourselves when this or that currency is cheap and when it is expensive. The easiest way to do this is to analyze the schedule of the course we are interested in for the period of, for example, last year. We will determine the highest and lowest value on the graph, and we will mark the horizontal line exactly in the middle, which will be a reference for us to assess the situation. Suppose that when the exchange rate is below our line, the currency is cheap, if it is expensive.
Will the rate fall or rise?
It is also worth determining the trend. If we are interested in short-term investments, we analyze a shorter period (for example, a week), if we want to save the purchased currency for a longer period, we should look at a broader perspective (for example, a month or a quarter). Determining the trend will show us the trends of the exchange rate of a particular currency and whether it should be expected to increase or, rather, decrease in the near future.
- The results achieved by us largely depend on the correct determination of the price level and the adoption of the correct assumption regarding the direction of the trend of a particular currency.
- The currency market is characterized by high volatility, but with the exception of unique cases (such as, for example, the Brexit referendum, the price war between the United States and China), even a less experienced observer is able to identify prerequisites that can affect the direction of exchange rates.
The Forex offer is a good option for novice investors. It is characterized by greater stability and lower risk, and a low margin means greater profit than when using banks or stationary exchange offices. In addition, currency platforms, as a rule, are equipped with the necessary analytical support.
