Currency trading is buying and selling of one currency to exchange the financial benefit. The Seller would sale currency notes to earn the increased value of currency. This currency trade depends upon the rise and fall of a currency rate, if a consumer is holding Pounds in his pocket; he will sell these pounds to buy the currency whose currency rate is higher than pound. At later date, this purchased currency will be sold when rates are higher than the rate at which this currency was purchased.When the currency trader is buying any currency, at the same time he/she is selling one currency.The currency that is going to be bought is called, “base currency” and the currency that is being sold in exchange is called “counter currency”. Currency exchange rates are shown in currency pairs: EUD/USD,GPB/USD etc. This currency pairs shows that how much of the counter currency is needed to buy the required amount of Base currency. Let us try an example to have an idea about how currency exchange rates works in currency pairs , EUD/USD is 1.4784 , this means, 1.4784 USD are needed to buy 1 EUD.There are two price quotes mentioned by Currency Brokers in currency exchange /bank, Bid price and ask price.
Bid price is the price broker is willing to pay us, when we will sell currency to him.
Ask price is the price that broker will charge from us in case we buy same currency from him. This bid price is always lower than the ask price, having element of profit margin.
We see here as how to maximize gains from currency trading and avoid loss of money.Always remember, when going for currency buying and selling, do not play wildly, and keep a careful watch over currency trends.Make sure you have credible information about currency trend. You will always be exchanging your home currency with the foreign currency. The primary things that being a good currency trader you need to do would be, gathering good capital of your home currency. A wise idea is to accumulate your monthly saving for a number of months, you may open a bank account in which you will keep this Surplus income (saving). Go for the bank/currency exchange office to watch the exchange rates, and also watch the trends of last 6 months as how the currencies are falling and rising against each and other.if you find that a specific foreign currency is showing rising trend against your home currency, you should watch when its rate will be lower. Withdraw a sum from your home currency account and buy the currency at the spot.After few time, again watch the movement of exchange rate, when the exchange rate of that foreign currency is higher, you are going to gain profit on selling it.Sale it and gather the sum, again put half or all of the sum to buy the same currency when its rate is lower.