Forex for Beginners

This comment has been written by a subscriber of Forex Review. I created an entry of this comment so everybody can read the Forex basics.

"... the tactic of subscribe to a Forex System that gives you the Forex signals. Forex signals means, for example, the advise of to buy euros against yens, or dollars agains pounds, etc. etc. The advise is given by a computer that makes the analysis of the market and predicts the future movement of the currencies exchange.

"For example, let's say you invest 50 dollars. The broker will give you a leverage of your choice, let's say you choose a 1:100 leverage (there are also leverages of 1:200 and 1:400), that means that your invest is 50 x 100 = 5000 dollars. If you move the invest buying euros against yens, well, let's say you can buy 4000 euros with your 5000 dollars. Those 4,000 euros may increase thier value against the yen; if you bought the euros when the euro was 200 yens worth, and one day after the euro values 210 yens, then than means you have won 40,000.00 yens (10 yens x 4,000). Based on our example that a euro is 210 yens now, that means you have won 190 euros (40,000.00 / 210 = 190.47 euros).

"That was an easy example. Most of the cases the currency movements are based on pips. ¿What is a pipe? Let's see, let's suppose a euro is 1.200 US Dollars worth. If the euro increases its value, that means the euro worths 1.201 US Dollars now. That .001 cent may not be significant, but if you multiply it by 5,000 that means you are earning much more for pipe. And that's what a pipe means: the spread of the movement that may increase or decrease the value of the currency. The pipe may value a .001 cent like the example of this paragraph. But normally the pips have a larger spread.

"I suggest to try the demo before you invest anything, that would make you more familiar to the market..."

I suggest to try the eToro - Forex Trading, this will let you understand the Forex functionalities, get familiar with the spreads, the pips, the commissions, the market, etc. etc. Once you notice you are being able to earn profits then it is time to invest real money.