If you are an active trader in the Foreign Exchange Market or the Forex, then you know the value of being regularly informed or updated of the current Forex exchange rate. It is basically the heart and soul of any Forex trading and it is true this information that a trader will base his analysis of his current status in the Foreign Exchange Market.
Forex exchange rate is highly volatile. It means that it is always changing. The exchange rate of a currency at one given time will not be the same the next day. To simplify the concept, the Forex exchange rate of let's say the Japanese Yen is 100 yen to 1 United States dollar, what it means is that 100 yen is equal to the value of 1 U.S. dollar. And the rate or frequency of the changes of these currency rates varies and it is with the the volatility of the currencies that Forex traders make their living.
How do Forex traders profit from a Forex exchange rate? Let us see if we can explain it as simple as possible.
A trader buys a currency at a certain amount or exchange rate. Some people think that if they hold on to their currency for a long period of time and just wait till its rate goes up, then they can earn profits from it. But it is actually more complicated than that. But the same basic presumption applies: that when the Forex exchange rate of a trader's currency rises, he then can sell it or exchange it as is the proper term to use. The difference between the previous rate and the new rate when the currency was sold or exchanged is the profit that the trader made.
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