Earn money from forex

Since it might be a bit too complicated for a beginner to figure out how to make money in Forex, we offer you this example:

You believe that the Euro to US Dollar (EURUSD) rate will increase. In your account you have 2000 USD (eGlobal-standard). At a price of 1.2750 you buy 150,000 Euro for 150,000*1.2750 = 191,250 USD.

This is possible because of credit, which allows you to make transactions worth 100 times more than funds you have in your account (in this specific case, the maximum sum available for transactions is 2000*100 = 200,000 USD).

After a period of time, the exchange rate increases. You sell 150,000 Euro at the rate of 1.2850 and get 150,000*1.2850 = 192,750 USD.

Thus, after buying at a low rate and selling at a high rate, the difference 192,750 - 191,250 = 1500 $ is your gain. You have earned 75% of initial funds in your account, while the rate increased by 0.8%.

Another way of making a profit on Forex is based on the decrease of the quotation rate of the EURUSD currency pair:
Having created a real account with 200 USD in it (eGlobal-mini), you determine the upper and lower limits on the Euro to Dollar chart and sell 15,000 Euro (0.15 lot) at the upper limit for a price of 1.2850 (bid price) USD for 1 Euro, which equals 19,275 USD (15,000 Euro multiplied by the rate of 1.2850).
You have funds in USD in your account, but you can sell Euro using the automatic borrowing system. Hence, the company lends you 15,000 Euro free of charge, which you can sell by sending a selling request. Due to the leverage, the actual deposit is 100 times less than the sum sold: 15,000/100 = 150 euro. At a rate of 1.2850 this equals 192,75 USD. This very sum is going to be a deposit for a credit (marginal) transaction for your account. The maximum possible deposit in this case equals 200 USD.
Then during the day the price drops to the lower limit and you decide to buy 15,000 Euro at a price of 1.2750 (ask price) USD for 1 Euro, which equals 19,125 USD. The 15,000 Euro that you have bought are written off your account towards the repayment of the company loan, while the difference is left in your account.
Thus, due to the fall in the exchange rate you earn the difference between sold and bought, which is 19,275 - 19,125 = 150 USD. You managed to earn 75% (150 dollars) of your initial sum of 200 USD due to a rate decrease by 0.8% (from 1.2850 to 1.2750) in only one day.
The company takes a commission in the form of the difference between the ask and bid prices or spread, which in this example is 3 USD (spread of EuroDollar pair equals 0.0002 or 2 pips). More detailed information on terminology is in the Instaforex
In these examples, the spread is not taken into consideration while calculating percentages of rate changes because of its non-essential influence on the results. In the case of mircoForex or eGlobal-standard the calculations are similar with a difference only in account currency  US cents for micro, USD for mini & standard.  The consecutive use of the transactions shown gives the income of 75%+75% = 150%. In actual practice a much greater return may be achieved by using corresponding money management methods. Risk management methods also play an important role in trade

Theoretical knowledge and experience are needed in order to earn money on any financial market. This work experience includes:

• Fundamental analysis
• Technical analysis
• Money and risk management

Fundamental analysis allows to determine the dependence of exchange rates of different currencies on the economic situation of countries; explains the purposes and instruments of central bank's financial policy; and reveals the proportion of different financial markets, reasons for their development and stagnation. Fundamental analysis is used for middle and long-term prognosis; it evaluates the perspectives of a market situation. It is built on fundamental mutually intertwined economic factors. The biggest difficulty lies in the fact that changes in one of those factors can influence all the rest, the number of which varies from 20 to 50 depending on the country. That's why fundamental analysis is not used by everyone. Only 10-20 % of traders apply it in their practice.
Technical analysis includes examination of price diagrams, price history, and the number of changes in quotation within a certain period of time. It's very convenient to use because data on prices is available online. Technical analysis mainly gives information about market activity and only conditionally about market volume considering only short periods of time called time-frames.
Money and risk management is the third and also very important aspect of the trading system. Financial operations on Forex are very risky, and often the higher the supposed profit the higher the risk. Following all rules of money and risk management helps reduce losses and increase profits.
Money and risk management appeared in 18th century, when it was applied in gambling to raise the chances for winning. Mature players followed their own strategies, incurred losses to enjoy profits later. Working on financial markets is similar to gambling because both profits and losses are not predictable. That's why principles of money and risk managements started to be used in the financial sphere.
It often happens that beginner traders do not take aspects of money and risk management seriously; but this mistake can lead to failure even with a good trade strategy. Not just sums of earned money are important in trading; amounts of losses during work add to success as well. That's why it's recommended to calculate the portion of risk-subjected capital for successful trading.