Forex trading is the process of buying a currency against another with the purpose of making money from the increase in value of the purchased currency.
Best Forex Brokers (Non-US Version)
As an example, let's consider you buy 100,000 Euros against US Dollars at the price of 1.1100 EUR/USD. This means you will pay 111,000 dollars for the 100,000 Euros.
After one day, the EUR/USD rate increases to 1.1150 and you sell back the euros for 111,500 dollars.
After closing the trade, you made a profit of 500 dollars in one day, while the price movement was very small. This is how forex trading works.
As you have seen in the example above, you need more than 100,000 dollars in order to make a 500 dollars profit in a single day.
Since currency values are not very volatile, you need to exchange large amounts of money to have significant profits or losses. This is where leverage comes into play.
In order to trade forex like a pro you will need to use a specialized forex broker. Forex brokers provide leverage that allow you to trade high volumes even if you do not deposit high amounts of money.
If your broker offers you 100:1 leverage it means you can trade 100,000 dollars by having only 1,000 dollars in your account. The leverage ratio is the amount of times you can multiply your account balance when trading.
If you have 1,000 dollars in your account, you can trade 100,000 using leverage of 100, or you could trade 400,000 using leverage of 400.
Brokers offer various levels of leverage. It can vary from only 30 for certain brokers to as high as 1,000.
Generally, a broker that offer at least 100 leverage is enough, because using too much leverage is also risky, as it can result in higher losses if the market moves against you.
In conclusion, leverage can be a very useful tool to increase your potential profits, but it is also very risky as it can also increase your potential losses.
Leverage must be used with care only after getting enough experience doing smaller trades.
Choosing a good forex broker is essential when trading forex because it improves your chances of success. A good forex broker will offer lower spreads between the buy and sell price, it will execute your trades faster and it will process your withdrawals very quick.
Below are the best forex brokers in the world that accept traders from Qatar: