Is trading currency the same as buying/selling of stocks?
As for stocks, for instance, if you buy a share for $2. If the value of the share rises to $3, and then you sell it immediately, earning a $1 profit.
What about trading currency? How do you do it? Sorry, I'm having currency problems because it puzzles me in terms of... for instance trade the Australia currency for US Dollar and then trade back again for profit.
Please show me an example. Thanks.
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This reminds me of a joke. A Japanese man goes on vacation to the US. At a local bank he converts 10,000 yen into 100 dollars. After a week of sight seeing he comes back to the bank to change his dollars back into yen before going home. At the end of his trip he has fifty dollars left which the bank converts to 4,750 yen. The Japanese tourist asks "What's going on? Ten thousand yen equals 100 dollars but 50 dollars equals 4,750 yen? How can that be?"
The bank teller simply shurgs his shoulders and says "fluctuations".
The Japanese tourists thinks for a minute then responds "Yeah, well fluck you Americans too!"
But seriously, as an ordinary person you cannot make any money by trading currencies. Ordinary people have to pay brokers to place their trades and you realistically don't have enough capital to make large enough trades to make it worth your while. The international currency markets are dominated by banks and other financial services firms which trade directly with each other, without a middle man. In addition, these institutions trade millions of dollars at a time.
For example, the exchange rate between the dollar and the yen changes, slightly, constantly. Say right now a dollar is worth 100 yen. An hour from now a dollar might be worth 100.1 yen. If you buy 1,000,000 yen at 100 yen/dollar and then sell the same 1,000,000 yen at 100.1 yen/dollar you have turned a profit of 100,000 yen or 1,000 dollars. As a matter of fact, the dollar/yen rate is often quoted to four decimal points.
If you need to buy an exchange membership, pay commissions or put up margin collateral this will eat into your profit. If you do not have 1,000,000 yen to throw around you cannot make this trade at all.
Currency Trading is what a pure Free Market looks like. There is no rhyme or reason to the price of a currency at any given moment in time. There are some fundamentals when it comes to the health of a nation or the interest rates its central bank sets from time to time. But outside of that, trading currencies as an investment is like playing Russian Roulette.
A currency trade is really an exchange between two commodities. I'll give you $5.00/USDs for 2.5/British Pounds. Or I'll give you 2.5/Pounds for 10/Euros. Wealth is only created when you can sell those currencies you've obtained, convert them back into your Home Currency (ie: USD) and end up with more dollars than when you started.
If you are more lucky than smart,. you can make crazy money. But more people have lost money trying to trade currencies than made it.
Its a much wiser investment to just buy assets in foreign countries and attempt to use the currency differences as a possible advantage. Than to actually trade the currency market. What I mean is that you would be wiser to buy British Bonds yielding 15% than British Pounds. To buy those bonds, you still have to buy the currency, but you don't get stuck with the currency that might tank for no reason the next day.
You can't make a profit trading money because even if currencies inflate of deflate you will always have the same value of the money you are trading. If you started out trading $1000 into Pounds or Euros in a hundred years you might be holding $1260 it would still be worth the same amount as you started out with.
You can make money in binary options only if you treat it as a real form of investing. Learn here https://tr.im/8lcIz
This means learning how it works, learning how to read charts and learning how you can make accurate predictions. All these are not that difficult but it takes some time. If you treat it as gambling and just make random predictions then you will obviously not win.
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