“Never depend on single income. Make investment to create a second source.” – Warren Buffet
Indeed. Just having a secured salary is never enough. Saving and increasing your bank balance isn’t wise as well. Too much bank balance will attract attention of the government, and half of your hard earned money will go by paying taxes. Investing is a good habit, and it helps in reaping future profits. Forex is gaining popularity among investors and with proper knowledge of when and how to sell forex; your investment may double itself in a matter of days.
Before dropping all your eggs in one basket, you need to understand what you are dealing with here. Get a grip on all the terminologies involved and develop proper intuition. But above all, you need to understand what exactly are you buying and what is meant by sell forex.
What are you selling?
Forex is the currency market. The price of one currency is set against another and mentioned in terms of a ratio. You buy one currency by paying another currency, sell your bought currency and get back another currency. In short, forex is an exchange of currencies.
Say, you decide to buy the British pound (GBP). Current rate says GBP:USD = 1.5128. This means that you have to pay 1.5128 USD in order to buy 1 GBP. With USD 1512.8, you bought 1000 GBP. Now, if the valuation of GBP rises against USD, say GBP: USD = 1.5228, then by selling the 1000 GBP, you will get back USD 1522.8. That gives you USD 10 profit. So, you actually bought and sold currencies as a commodity.
When to sell forex?
You can sell your bought currency when the valuation rises to reap a profit. You can also sell off your acquired currency to prevent loss. If you see that the forex quote of your bought currency is falling, you can use stop loss and limit your loss amount. That is called playing safe. But if your intuition tells you that the rate will rise again, instead of waiting, you can sell off your acquired number and buy more with the received amount.
Understand this trick in sell forex domain with an example. You have bought 1000 GBP with 1512.8 USD. Now, instead of rising, the quote falls to 1.5000. That’s a fall by 128 pips, and you will lose 12.8 USD in the process.
Now, instead of just going for plain and simple sell forex, why not sell this and get back USD 1,500 and wait for GBP to fall more. When it reaches say around 1.478, buy 1015 GBP in place of 1000. So when the quote soars to 1.5128 again, you will get USD 1535.49. You make up for your $12.8 loss, simultaneously make $23.5 profit.
Do not be deceived by the small figures mentioned here. Trading is generally done in the range of $100,000, and the amount will magnify all your profits and losses. A $23.5 profit on $1500 is about 1.5%. When you trade with $100,000, the same percentage will fetch you $50,000 profit. That is quite high. With proper application of the sell forex concept, this market is the ideal “second source” of income.