Deriving profit from trading in the financial markets

When trading in the financial markets, it is possible to derive sizeable profits from the difference between the buy and sell values of financial instruments, whose prices change constantly and rapidly due to economic, political and social factors. It is particularly noteworthy that many financial markets operate on a ‘margin trading’ basis, meaning that, for instance, to open a position to sell EUR 100,000, it is sufficient to have as little as EUR 500 on your account: the remaining amount will be provided through leverage by a broker. Another advantage is that it is not necessary to have euro to sell euro due to the fact that, since a customer is trading exclusively on price differences, there is no ‘real’ sale or purchase of currency. You can sell euro even if there are only US dollars on your account.

Here is an example of how it is possible to derive profits in the event of a correct analysis of market conditions.

When trading in the market, you can choose an amount of leverage from 1:1 to 1:200. Leverage of 1:200 means that on your trading account with a broker you can have an amount 200 times lower than the transaction amount. Hence, in order to buy EUR 100,000 with leverage of 1:200, you would need only EUR 500.

Imagine that a customer buys EUR 100,000 at the rate of 1.3850 for USD 138,500. Suppose the customer predicts the market movement correctly and the price reaches the level of 1.3950 points. It is possible to sell EUR 100,000 for USD 139,500 and earn 100 points. In this scenario, the profit would be USD 1,000.

Trading in other instruments is based on the same principle.