In the following examples, we are going to use fundamental analysis to help us decide whether to buy or sell a specific currency pair. If you believe that the U. By doing so, you have bought euros in the expectation that they will rise versus the U.
By doing so you have bought U. S dollars in the expectation that they will rise versus the Japanese yen. If you believe that Japanese investors are pulling money out of U. By doing so you have sold U. S dollars in the expectation that they will depreciate against the Japanese yen. If you think the British economy will continue to do better than the U. By doing so you have bought pounds in the expectation that they will rise versus the U.
By doing so you have sold pounds in the expectation that they will depreciate against the U. Margin trading is simply the term used for trading with borrowed capital. You can conduct relatively large transactions, very quickly and cheaply, with a small amount of initial capital. When you decide to close a position, the deposit that you originally made is returned to you and a calculation of your profits or losses is done. If you do not want to earn or pay interest on your positions, simply make sure they are all closed before 5: Since every currency trade involves borrowing one currency to buy another, interest rollover charges are part of forex trading.
If you are buying a currency with a higher interest rate than the one you are borrowing, then the net interest rate differential will be positive i. Note that many retail brokers do adjust their rollover rates based on different factors e. Here is a chart to help you figure out the interest rate differentials of the major currencies. Accurate as of February Partner Center Find a Broker.
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