How can you make money with forex trading is a rather perplexing question to some people. It simply refers to methods, strategies, guides through which one can make unlimited amount of money from foreign exchange market trading. There are many reasons to be excited about the opportunity to make money from forex.
WHAT IS FOREIGN EXCHANGE MARKET TRADING (FOREX TRADING)
This refers to the exchange of a particular currency for another in the foreign exchange market. It could be the exchange of dollar for naira or vice versa. People in foreign exchange trading usually purchase foreign currency when its value is somewhat low and sell when the value increases.
Factors Affecting How You Can Make With Forex Trading
- INFLATION RATE OF YOUR COUNTRY
Inflation is a situation where large amount of money will purchase very little quantity of goods in the market. A country with low inflation rate will experience increase in the value of their currency while a country with high inflation rate will experience devaluation of their currency. You ability to know the inflation rate of your country will increase your chance of making more money in foreign exchange market.
- YOUR COUNTRY’S INTEREST RATE:
Interest rate is the amount of money charged by the lender from the borrower. Interest rate is usually expressed in percentage. Increase in interest rate will lead to increase in the value of a country’s currency. Your ability to know the interest rate of your country will in no small measure determine how much you can make in foreign exchange market.
- BALANCE OF PAYMENTS OR COUNTRY’S CURRENT ACCOUNT
Balance of payments or country’s current account refers to the total earning of a country at a particular period of time. It deals with the total export, total import, debts and other transactions of a country. If your country have more favorable balance of payments over another country at a particular time, you can buy from the country with less favorable balance of payments if the possibility is there that the country’s current account will appreciate in no distant time.
- PUBLIC DEBT/ GOVERNMENT DEBT
Public debt or government debt refers to the amount of money owned to an individual or government of another country by a particular country. A country with public debt or government debt is likely to experience devaluation of their currency leading to inflation with its devastating effect. Your ability to determine the public debt of your country will not in small way determine how much you can make in foreign exchange market.
Recession refers to a period of decreased economic activities of a country. In period of recession, government debt increases, inflation is on the rise, and there is general low standard of living. Your ability to predict period of recession could increase your advantage in the foreign exchange market.
- YOUR ABILITY OF PREDICT/ SPECULATE
Your ability to predict the increase or decrease in value of a country’s currency will increase your advantage of making more profit in foreign exchange market.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.