How Does Forex Works?

 

Currencies are always traded in pairs - the US dollar against the Japanese Yen, for example, or the English pound against the Euro. Every transaction involves selling one currency and buying another, so if an investor believes the Euro will gain against the dollar, he will sell $$$$ and buy Euros.
The potential for profit exists because there is always movement between currencies. Even small changes can possibly result in substantial profits because of the large amount of money involved in each transaction. At the same time, it can be a relatively safe market for the individual investor. There are safeguards built in to protect both the broker and the investor. A number of software tools exist to minimize loss.


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