How Does Forex Trading Online Work?

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Forex transactions and rollovers
In forex trading online, the profit is made through the exchange of a pair of currencies in the forex market. It is the monetary value of the pair during the time of exchange determines the profit or loss. For example, take the case of the pair EUR/USD. Let us assume that a trader thinks about trading this pair in a calculation that the money value of the EUR will go up against the USD. It means the monetary value of the USD will face a fall. During that time, the trader buys the pair at 1.2500 and purchases currency that has a value of around $5000.
Imagine that later on the day of the purchase, the price increased to around 1.2550. It means that the trade is up and the trader gets a profit of around $25 (5000 * 0.0050). But if the price gets dropped to 1.2430, then the trader will be at a loss of $35 (5000 * 0.0070).
In forex trading online, the price of the currency keeps on changing. So, in most cases, the trader will hold on to a particular position overnight. It is the broker that does the rollover of this position. It results in a credit or debit depending on the interest rate.
The rollover is more like a double sword in forex trading online. It can either give a huge profit or a big loss to the traders according to the rollover time. If the same position is held by the trader for a long time, it will greatly affect the interest rate.
It can create a big difference in the credit or debit rate. Most brokers offer huge leverage. It is the US brokers that offer the leverage up to 50:1. A quick profit or loss will be made depending on the leverage taken by the traders for trading. Leverage is quick to flip. So, traders have to be careful while using them.

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