The short and quick answer is yes. You can make money through forex trading is you can fulfil steps as follows. You need to equip yourself with sufficient knowledge, such as the forex trading basics, then choosing the trading system and continuously master it over the time, until you become a professional forex trader.
Forex, or foreign exchange, is the knowledge and art of trading different currencies and making the profit through it. Each country has its own currency, and the currency of different countries can be bought and sold against each other. Forex traders are those people who make money through buying and selling different currencies against each other. Forex is already known long in the history and it is not a new business.
As it is related to the foreign currency, forex’s trade is between the currencies. In Forex trading, you deal with currency pairs. There are four major currency pairs: British Pound and USD (GBP/USD), Euro and USD (EUR/USD), USD and Japanese Yen (USD/JPY), USD and Swiss Frank (USD/CHF). In each currency pair, the first currency works as the commodity and the second one works as money. For example when you choose GBP/USD to trade, if you buy, you buy British Pound against USD and, if you sell, you sell British Pound against USD. It doesn’t matter what currency you have in your account. The trading software and the brokerage system take care of the exchanges and transactions automatically.
So, how is exactly make money through forex? The quick answer is yes. Buying low and selling high or selling high and buying low is the base of making money in Forex. For example, if you buy GBP against USD when each GBP is equal to $1.9554USD and then sell it when it is $2.0235USD, you have made a profit.
The big question is that how can you find out the best time to buy and how can you forecast that if you buy, the price will go up and you will make a profit?
In order to know the optimum buy and sell, there are two methods to known to assist in making the decision namely Technical Analysis and Fundamental Analysis.
Technical Analysis is the science or skill of forecasting of the future movements of the price using the past movements and data. In technical analysis, the direction of the price can be predicted using the price chart analysis and also with the help of some special tools that are called Indicators. Obviously, the past movements cannot guarantee the future movements and so technical analysis is not a hundred percent precise and guaranteed forecasting but if you learn the technical analysis correctly, you can make more accurate predictions and so you will be in yield profit at the end. Technical analysis rules, techniques and tools are 99% the same in the stock and forex market. So if you learn technical analysis, you can use it both in stock and forex market.
Fundamental Analysis is used to predict the future movements of currencies’ prices, according to the economic and even political situation of the world, and important and developed countries. Fundamental analysis has a long term usage, but good traders can predict the sudden changes that happen after releasing important news about the economic state of a significant country. For example, when the news says that the economic situation of USA is improved for 5% in comparison to the last month, USD will become stronger and people start buying it. So the value of USD will go up because of the sudden demand increase. If you know the consequence of the news on the price, you can take an appropriate position and make money. Of course, there are two sides to this story which mean if you take the wrong position, you will lose money.