HOW DOES FOREX WORK?

FOREX works very simply. Exchanging foreign currency is the buying
of one currency while selling another at the exact same time. It
is done in pairs. Four major currency pairs are usually used for
investment purposes. They are the Euro against the US dollar, the
US dollar against the Japanese yen, the British pound against the US
dollar, and the US dollar against the Swiss franc. The way it
works is, with the ever changing value of each nations currency
constantly changing, one nations currency is never precisely equal
to another. FOREX traders use this to turn a profit. For example,
if the 1 Japanese Yen is worth approximately $1.48
U. S. and you believe that the Yen will increase in value in
comparison to the U.S. dollar, you would sell your dollar and
purchase the Yen. Once the value of the Yen increases, you would
sell it back to purchase the U.S. dollar. E.X. 1 : The Yen is
currently valued at $1. 48 USD. You sell $14 800 to buy 10 ,000
The Yen proceeds to increase in value. After a short amount of
time, your Yen is valued at $1.62 You sell your 10 and re-purchase
the USD. Your initial investment of $14 has turned into 200 , almost
a 10 profit. One thing that makes FOREX so much more exciting is
the large amount of margin that is allowed by most brokerages.
Margin is a system used in FOREX that allows an individual to
increase his purchasing power greatly. An investment on $1000 of
your own money will offer you $100 ,000 worth of purchasing power
at a 100 :1 ratio that most brokerages offer. This allows you to
purchase and sell in much greater amounts than would otherwise be
possible.

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