| y"> | | | | you for the two transactions). |
| It seems like you can't walk down the street or get | | | | But what happens if the relative value of the two |
| on the internet these days without hearing or reading | | | | currencies had changed during the couple of weeks |
| about someone who has made huge profits in Forex. | | | | that you had your Canadian dollars? Here's where it |
| But what is Forex? Should you be involved in it? | | | | gets really interesting, and potentially exciting and |
| First of all - what is Forex? It's just an abbreviation | | | | profitable. |
| for the FOReign EXchange Market. | | | | Example 1: Let's first imagine that the value of the |
| If you have traveled between different countries, | | | | Canadian dollar has fallen to $2.00 as compared to |
| you have probably already experienced the basic | | | | one US dollar while you had your Canadian dollars. |
| idea. | | | | Now you will need two Canadian dollars to buy one |
| Let's say that you live in the US, and you have | | | | US dollar, which means you could exchange your |
| planned a vacation in Canada. You will need to | | | | $1000 Canadian money for only $500 in US dollars. |
| exchange your US money for Canadian money. At | | | | Ouch! You just lost $500 US dollars! |
| the time of this writing, you would receive about | | | | Example 2: But let's think about another possibility - |
| $1.23 in Canadian money for each US dollar that you | | | | maybe the value of the Canadian dollar changed in |
| traded. You can make this currency exchange in | | | | the other direction as compared to the US dollar |
| either country. | | | | while you had your Canadian money. Let's say that |
| When you return to the US and you want to change | | | | you only needed 50¢ Canadian to exchange for |
| your left-over Canadian money back into US dollars, | | | | $1.00 US. Then you could buy two US dollars for |
| you would receive about 81¢ in US currency for | | | | each Canadian dollar, giving you a total of $2000 |
| each Canadian dollar that you exchanged. | | | | when you converted back to US dollars. |
| Those differences are because, right now, the | | | | Wow! You just made a profit of $1000 US dollars! |
| Canadian dollar is worth less than the US dollar in the | | | | This, very briefly, is the basic idea behind Forex |
| global marketplace. | | | | trading. Forex traders buy one currency, planning to |
| This simple idea is the basis of the Foreign Exchange | | | | make profit when they convert that currency back |
| (Forex) market. The difference between the | | | | to the original currency, as in Example 2. |
| example above and the "real" Forex market is a | | | | For many years, Forex trading was only available to |
| matter of scale. Instead of you exchanging your | | | | professional traders who had extremely large |
| vacation money between different national currencies | | | | amounts of money to trade (for example, think Bank |
| once a year, the big banks in different countries are | | | | of America!). |
| constantly trading different currencies between | | | | That has all changed. Now you can make large profits |
| banks and countries. | | | | in Forex trading even if you are starting your |
| But why do they do that? How do they make (or | | | | currency trading with as little as $50 - $100 to invest. |
| lose) money on those exchanges? | | | | How, exactly, can you do it? That is the topic of |
| Let's go back to your Canadian vacation. But this | | | | another article, but here is the simple answer. You |
| time, to make the math easier, let's say that at the | | | | open a brokerage account for trading Forex (it can |
| time of your vacation the US and Canadian dollars | | | | be as small as $50 - $100 to start). You then use |
| had the exact same value. One US dollar could be | | | | that account to trade between pairs of different |
| exchanged evenly for one Canadian dollar. | | | | currencies - for example, the US dollar/Great Britain |
| Let's also say that your vacation had to be canceled | | | | Pound or the Canadian dollar/Euro. |
| at the last minute (after you had already planned | | | | Of course, there are more details which will be |
| ahead and traded your $1000 US dollars for $1000 | | | | discussed in future articles. But, for now, you know |
| Canadian dollars). | | | | the basic ideas about trading Forex. |
| Finally, let's say that you didn't get around to | | | | And - on to the final question in this article's title: |
| converting your Canadian dollars back into US dollars | | | | Should you be trading Forex? |
| for a couple of weeks after your trip was canceled. | | | | Yes, yes, and yes! Profits are waiting there for you |
| If the relative value of US and Canadian currencies | | | | to take, you already have learned that the basic |
| hasn't changed, you will trade your $1000 Canadian | | | | concept is easy to understand, and there are many |
| for $1000 US, and be right where you were before | | | | computer-based Forex trading systems available to |
| you made your US-to-Canadian-to-US currency | | | | handle the technical details for you completely |
| exchange. In other words, you'll break even on the | | | | automatically! A computerized "expert advisor" can |
| two exchanges (minus the small commissions that | | | | make all your trades for you, completely on autopilot. |
| banks or currency exchange companies will charge | | | | |