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What Is Forex and How to Make Money with It?

December 14th, 2012 by | Category: Basics

Forex is the knowledge and art of trading different currencies and making profit through it. You know that each country has its own currency, and the currency of different countries can be bought and sold against each other. Forex traders are those people who make money through buying and selling different currencies against each other. Forex is not a new business, and its history is as old as the history of money.

What is forex is a question that people ask a lot these days. There are people who have been making money through Forex from many years ago. Fortunately, with the help of computer and internet, Forex trading has become much easier. You can sit at your personal computer and trade from home without having to make any phone call or referring to any bank.

The way that we trade forex, and through the trading system that we have developed, a professional forex trader has to spend only 30 minutes per day, to locate the trading opportunities (trade setups), and take his positions. Then he can go and enjoy his life, and come back tomorrow. Read these articles:

  1. How Does It Feel to Be a Professional Full Time Forex Trader?
  2. A Forex Trading Plan
  3. How to Become Multi Millionaire Trading Forex, with a Proper Trading and Risk Management Method

Watch this below video to learn about currency market and currency trading: Forex Trading Explained in Simple Words

How Is It Possible?

There are brokerage companies that enable you to buy and sell different currencies through the Internet and some simple softwares that are called trading platforms. For any trade that you make, you pay a small commission to the brokerage company that you are trading through.

You need to find a good, reliable and well-known brokerage company and sign up for an account with it. Then you have to fund your account. You use the money you have in your account to trade. Any profit that you make, will be added to your account and visa versa. Then you can withdraw the money you have made.

What Currencies Can You Trade?

In Forex, you deal with currency pairs. There are four major currency pairs: British Pound and USD (GBP/USD), Euro and USD (EUR/USD), USD and Japanese Yen (USD/JPY), USD and Swiss Frank (USD/CHF).

In each currency pair, the first currency works as commodity and the second one works as money. For example when you choose GBP/USD to trade, if you buy, you buy British Pound against USD and, if you sell, you sell British Pound against USD. It doesn’t matter what currency you have in your account. The trading software and the brokerage system take care of the exchanges and transactions automatically.

How Can You Make Money through Forex Trading?

Buying low and selling high or selling high and buying low is the base of making money in Forex. For example If you buy GBP against USD when each GBP is equal to $1.9554USD and then sell it when it is $2.0235USD, you have made a profit. I don’t want to focus on more details in this article and explain how the profits and the money you make are calculated. I will talk about these topics in other articles. In this article we explain about the nature of forex trading in general.

The big question is that how can you find out the best time to buy and how can you predict that if you buy, the price will go up and you will make a profit?

That is a million dollar question.

There are two methods to know the optimum time to buy and sell: Technical Analysis and Fundamental Analysis.

Technical Analysis:

In technical analysis, the direction of the price can be predicted using the the price chart analysis and also with the help of some special tools that are called Indicators.

Technical analysis might look a little complicated at the beginning. But it is much easier than what you think.

Technical Analysis is a science and art, and if you want to make money through Forex trading, you have to learn the technical analysis properly

It is not too hard to learn the technical analysis. If you are a focused and a serious person, you can learn it within a few months. There are a lot of free resources over the web that you can use to learn. There are some expensive training courses, but those who sign up for them are not happy and believe that they learned nothing. So don’t waste your money. If you are serious to learn, there are a lot of free resources over the Internet. You can also visit our website every now and then, or subscribe for our newsletter and receive our most recent articles automatically (you can subscribe at the end of this article.) You can learn technical analysis by referring to our website. We will do our best to cover all of the topics of technical and fundamental analysis on this site.

For now, to have a clue about the technical analysis, you can take a look at these articles:
Symmetrical Triangles Breakout in Forex Trading
Japanese Candlestick Charting Techniques and Patterns
EURUSD Daily and Weekly Chart Analysis – EUR/USD Buy-Sell Signals
EURUSD Market Analysis and Direction in Long Term

Also these videos help you learn technical analysis and apply it in your trading:

  1. Chart Analysis – Part One
  2. Chart Analysis – Part Two
  3. Chart Analysis – Part Three
  4. Candlestick Signals and Patterns

Fundamental Analysis:

Fundamental Analysis is used to predict the future movements of currencies’ prices, according to the economic and even political situation of the world, and important and developed countries like USA, UK, Germany, Japan and….

Fundamental analysis has a long term usage, but good traders can predict the sudden changes that happen after releasing an important news about the economic situation of an important country. For example when the news says that the economic situation of USA is improved for 5% in comparison to the last month, USD will become stronger and people start buying it. So the value of USD will go up because of the sudden demand increase. If you know the effect of the news on the price, you can take a proper position and make money. Of course there are two sides in this story which means if you take the wrong position, you will lose money.

See how I used a special news which is called “Non-Farm Employment Change” to predict the direction of Euro against USD some time ago:
Non-Farm Employment Change and Its Impact on the Forex Market

Experienced and professional traders take the advantage of both technical and fundamental analysis. However, most traders are dependent on the technical analysis. Technical analysis is able to predict the price direction and movements.

Some Good Things About Forex:

1- Forex is an online home based business that doesn’t need marketing, recruiting and advertising. You only deal with the currencies through the Internet. So you will not have to reply any email, make any phone call and spend any money on advertising, or deal with the customers, clients, affiliates, subscribers and referrals. You do not have to ship anything to any buyer. You do not have to be worried about competition in your Forex business, because in this business you do not compete with anybody.

2- If you learn Forex trading properly, you can make a lot of money. Forex can be your full time job that makes thousands of dollars every month. I have to emphasize again that if you start working on Forex before you learn it properly, it can be risky and you can lose your money. It is like driving. If you drive a car, before you learn to drive properly, you will hurt yourself and others, but if you learn it properly first, driving will be pleasant and funny.

3- You can make a lot of money by spending a small amount of money. Unlike other investments like stock market that you have to invest a lot of money to make a reasonable profit, you can make a good income through investing small amount of money. It means you do not have to have a big account. You can start with a small account, grow it and have a reasonable account after a while.

I guess now you know what Forex is all about. In this article, I tried to give you some general information about Forex trading. If you are looking for a business to make money full time or part time, Forex is the best option. And if you are serious to choose Forex, you have to start learning it. This website is new, but I am not new to Forex trading. I am an experienced, professional and full time Forex trader. I created this website to share my experiences and knowledge with those who want to learn Forex. There are so many scams over the Internet that you have to be careful about. I will do my best to make this website as complete as possible for those who want to learn Forex. You can subscribe using the below form and check back every now and then and read my articles.

Good Luck!



12 Comments:
  1. Michael Kavanagh:
    February 18, 2013 at 6:25 am

    Hi Chris Pottorff
    Ive just read you’re intriguing article Dec 26th 2012 on FX. I am completely new to this & want to know how do i learn this. Can you advise me please. I would be most grateful of any advice you can give. Thank you.
    Kindest Regards
    Michael Kavanagh (Australia)

    • sharmil:
      October 13, 2014 at 12:10 pm

      hi this is regarding the post about the forex market, I would like to know how has it worked out?

    • andrew:
      November 9, 2014 at 9:59 am

      Hi Michael

      Did you ever make any profit using chris systems?

  2. Michael kavanagh:
    February 18, 2013 at 11:12 pm

    Hi Chris
    Thanks for the article. I’m an absolute beginner.
    I understand you have to have a working knowledge of technical analysis. Are there any text books you may suggest i look at?
    Kindest Regards
    Michael Kavanagh

  3. majid ali:
    March 4, 2013 at 12:07 pm

    Thanks dear its is helpful and very good knowledge. i like the way that

    you are explaining .thank you god bless you

  4. kamran Mazhar:
    March 12, 2013 at 7:49 pm

    Hi Chris
    Thanks For The article. I,m a new in Forex and i want to know about Forex Trading how to Trade in Market and how to make money u have any Text Book about Forex ?

    Regards
    kamran Mazhar

  5. rupam:
    July 4, 2014 at 11:39 am

    hi i m very interested to forex trading. i have learned many things from your article. thanxs for it..

  6. Marco:
    July 30, 2014 at 11:59 am

    hello! thanks for your contribution……..i really need to start this business and i am residing in tanzania…………can you advise me more what to do

  7. Asiri:
    August 8, 2014 at 10:56 am

    Thanks for your posts… although no one like to share their knowledge, I feel you’re the most special person among them…. I’m also learning about FX but before trading with live account I want to know more about theory of FX… so I think your posts will help me for that. like to say you thank you again…

    good luck..!!!

  8. kingsley:
    November 26, 2014 at 10:55 am

    thanks a lot. Your post really help me. Please can you give me some good and reliable brokerage companies that i can open account with?

    • November 26, 2014 at 4:12 pm

      Hi Kingsley,

      You are welcome.

      I regret to say that we don’t recommend any broker through this site. Sorry about that.

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