Cashing in on Price Movements

Trading Forex is exciting business. The market is always on the move, and every
tiny shift in currency rates can mean profits and losses of hundreds and even
thousands of dollars!
Let’s demonstrate how that can happen:
In general, the eight most traded currencies on the Forex market are:

USD-- U.S. Dollar
EUR-- Euro
GBP-- British Pound
JPY ---Japanese Yen
CAD-- Canadian Dollar
CHF-- Swiss Franc
NZD --New Zealand Dollar
AUD --Australian Dollar
Forex trading is always done in pairs, since any trade involves the simultaneous
buying of a currency and selling of another currency. The trading revolves around
18 main currency pairs. These pairs are:
USD/CAD EUR/JPY
EUR/USD EUR/CHF
USD/CHF EUR/GBP
GBP/USD AUD/CAD
NZD/USD GBP/CHF
AUD/USD GBP/JPY
USD/JPY CHF/JPY
EUR/CAD AUD/JPY
EUR/AUD AUD/NZD

When buying or selling a currency pair, each pair has its own Bid/Ask rate, for
example:
Pair Bid---Ask
EUR/USD 1.5420 1.5422


This means you could either:
Buy the pair at the Ask rate
Which means:
Buy 1EUR / Sell $1.5422
‐or‐
Sell the pair at the Bid rate
Which means:
Sell 1 EUR / Buy $1.5420


OK, but where’s the opportunity for profit?
The currency pair rates are volatile and constantly changing.
One way to profit is by buying a pair, then selling it at a higher rate.
The second way is by selling the pair, then buying it at a lower rate.