Many of our successful investors start from somewhere small such as this Forex Day Profitable Trading Tutorial. This is our first step in educating you to be the leader in trading foreign currency. Successful traders who completed our tutorial went on to the real ground floor of stock exchange markets and made profits instantaneously and recommended us to publish this Forex Day Profitable Trading Tutorial for serious investors to follow.
So, you think trading currency on the foreign exchange market is straight-forward? Think again!Many who think so ended up losing their shorts (change) at the end of the day and came crawling back to learn the basics. There is more to Forex than meets the eye.
Our Forex Day Profitable Trading Tutorial you're about to receive here will give you a basic idea of how things works. However, you must keep in mind that this tutorial is only scratching the surface. The Forex market is complex, fast-paced and requires serious further investigations, but if you wish to trade successfully, our Forex Day Profitable Trading Tutorial is where you need to start.
Let's start from the most fundamental building blocks of trades-currency. Currencies, like all traded goods have prices. The price of a currency is its exchange rate. It costs $1.50 to get 1.00 British pound. It also implies that it only costs 0.67 British pound to buy $1.
We will elaborate on the exchange rate later on in our Forex Day Profitable Trading Tutorial. But let us dig down to why US dollar is worth more than Canadian dollar; in other words, why is that one currency is worth more than another, and why the exchange rate fluctuates?
It used to be that most currencies of the world were backed by rare metals such as silver and gold. The US followed 'gold standard', which secured the dollar to an equivalence of one ounce of gold. The rest of other currencies were secured to the dollar and were allowed to vary no more than 1% margin.
Now the gold standard exchange rate has been abandoned, along with the fixed rate model. Instead, the new 'fluctuating exchange rate' model has been adopted in the foreign exchange market. Fluctuating exchange rates are no longer dependent on gold. They are governed by the market forces of supply and demand. All traded goods are determined by supply and demand.
The demand for a currency comes typically from foreigners who want to buy goods and services (Exports), or to lend and invest. Demand for a currency largely consists of Exports of Goods and Services and Exports of Assets like Bonds, Stock and Direct Ownership of Assets.
The supply of a currency typically comes from locals who want to sell their currency in order to buy goods and services abroad (Import), or who want to borrow or repay investments. Supply for a currency largely consists of Exports by citizens of Goods and Services and Exports by citizens of Assets like Bonds, Stock and Direct Ownership of Assets.
Those are the basics of a currency trade, but there are other factors to consider such as currency exchange rates, basis points, pips values, and many more which will be discussed later in our Forex Day Profitable Trading Tutorial.