How to exchange money for traders and webmasters without risks

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How to exchange money for traders and webmasters without risks

Currency transactions for which in the second half of the last century were sent to Siberia, and in some situations, deprived of life, today have become just as common as buying food or watching your favorite TV show. Our compatriots buy and sell a wide variety of currency, not only if their professional activities require this, but also in order to preserve / increase their savings, make some purchase on the Internet, replenish the account of their games, etc.

But if for an average user who changes a small amount of money within a month, the deviation of the rate by 2-7% does not play a big role (he will not waste time monitoring exchangers to win 3 dollars and lose the game time), then for people whose activities are directly related to this procedure, 7% – can be a whole state. The category of users of the worldwide network, whose representatives exchange currency on specialized web resources, is growing rapidly every year. These include:

● A huge army of freelancers (working with customers from different countries, they are forced to eventually receive their earnings in national currency).

● Owners of online stores and other online businesses.

● Professional players of the foreign exchange market.

● Traders working on trading floors.

● Ordinary inhabitants of our country who receive transfers to electronic wallets, etc.

If you look at this topic in detail, you can conclude that such a service as the exchange of currencies in the network every day is in great demand. Against the background of the growing popularity of exchange offices on the Internet, scammers also stepped up their activity. They use a lot of cunning tricks (starting with the creation of the site, the name of which is insignificantly different from the original and ending with tricky schemes that can deceive even experienced users.).

How to choose a reliable currency exchange point?

In order to independently find a reliable exchanger, with a good course, you need to spend a lot of time, while there is no guarantee that the web-resource you like will fulfill its promises. In the process of carrying out this operation, it may turn out that there are additional commissions whose payment will turn a “profitable” rate into a loss-making one. What to do? What are the options for solving such problems? The first – an independent search for an exchanger, is clearly not suitable. Hence, there are others, because in a market economy where there is demand, offers immediately arise.

The last few years, one of the best web resources, which monitors the exchangers around the clock (note, only real sites that prove their legitimacy fall into the number of applicants) is Bestchange.

Why Bestchange?

The submitted resource complies with three main rules that are mandatory for each potential user of the network:

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● All online exchange offices, as mentioned above, undergo mandatory reliability checks.

● Potential clients of the exchanger after switching to its site, should feel confident – nothing superfluous in the resource menu! A simple and convenient interface is one of the main criteria for the Bestchange administration to include this site in its list.

● The best course, no hidden commissions and minimum payments for the services performed.

● The declared time for performing currency exchange operations must correspond to the real one.

● All additional conditions (for example, the exchanger does not perform operations, if the customer has not been verified, or recently registered accounts in their purses, etc.) must be reported before the exchange is started.

How to exchange with Bestchange

After switching to the Bestchange web resource, users on the left side of the screen will see a green rectangle with a list of exchange directions. All of them (buy / sell) are conditionally divided into several groups. Among them:

● Crypto currency (MTC, Litecoin, Dash, Ethereum, ZCash).

● Money transfers and cash.

This green field is divided into two parts: “give” and “get”. It is enough for the client to choose the direction of exchange and in the center of the screen there will be a table with a list of exchange offices ready to produce the information of interest to the customer (the most profitable rate at the top and the most unprofitable at the bottom line). Then just select the site you are interested in with and make a currency exchange.

Advantages of Bestchange

The probability of deception in this case is almost equal to zero. On the site the user can always analyze the current situation (for example, learn about the sharp “jumps” of some currencies, the reserves that store exchange offices, read a brief history of the resource concerned, etc.). Another important positive point is the fact that the client can change a small amount, and making sure that everything went well, order a more serious operation. Although the administration assures that such a precaution will be superfluous.

Among the important points that characterize Bestchange on the positive side, it is also necessary to note:

● The site has a function such as “double exchange” (the user will see how best to perform the operation when there is no direct exchange direction).

● In the Statistics section, you can study the “behavior” of currencies of interest for a given period of time.

● A very useful feature is the warning that the minimum amount is for the exchange, that a certain direction does not work or shows non-standard (from the economic point of view) indicators, which often happens when the policy puts too much pressure on the world financial market.

● A currency calculator is provided.

● In case of any doubts, the client can get acquainted with the detailed history of the currency or the exchanger site of interest.

How Do You Make Money Trading Money?

Investors can trade almost any currency in the world through foreign exchange (forex). In order to make money in forex, you should be aware that you are taking on a speculative risk. In essence, you are betting that the value of one currency will increase relative to another. The expected return of currency trading is similar to the money market and lower than stocks or bonds. However, it is possible to increase both returns and risk by using leverage. Currency trading is generally more profitable for active traders than passive investors.

Key Takeaways

  • It is possible to make money trading money when the prices of foreign currencies rise and fall.
  • Currencies are traded in pairs.
  • Buying and selling currency can be very profitable for active traders because of low trading costs, diverse markets, and the availability of high leverage.
  • Exchanging currency is not a good way for passive investors to make money.
  • It is easy to get started trading money at many large brokerages and specialized forex brokers.

Buying and Selling Currency Explained

It is important to note that currencies are traded and priced in pairs. For example, you may have seen a currency quote for a EUR/USD pair of 1.1256. In this example, the base currency is the euro. The U.S. dollar is the quote currency.

In all currency quote cases, the base currency is worth one unit. The quoted currency is the amount of currency that one unit of the base currency can buy. Based on our previous example, all that means is that one euro can buy 1.1256 U.S. dollars. An investor can make money in forex by appreciation in the value of the quoted currency or by a decrease in value of the base currency.

How Do You Make Money Trading Money?

Another perspective on currency trading comes from considering the position an investor is taking on each currency pair. The base currency can be thought of as a short position because you are “selling” the base currency to purchase the quoted currency. In turn, the quoted currency can be seen as a long position on the currency pair.

In our example above, we see that one euro can purchase $1.1256 and vice versa. To buy the euros, the investor must first go short on the U.S. dollar to go long on the euro. To make money on this investment, the investor will have to sell back the euros when their value appreciates relative to the U.S. dollar.

For instance, let’s assume the value of the euro appreciates to $1.1266. On a lot of 100,000 euros, the investor would gain $100 ($112,660 – $112,560) if they sold the euros at this exchange rate. Conversely, if the EUR/USD exchange rate fell from $1.1256 to $1.1246, then the investor would lose $100 ($112,460 – $112,560).

Advantages for Active Traders

The currency market is a paradise for active traders. The forex market is the most liquid market in the world. Commissions are often zero, and bid-ask spreads are near zero. Spreads near one pip are common for some currency pairs. It is possible to frequently trade forex without high transaction costs.

With forex, there is always a bull market somewhere. The long-short nature of forex, the diversity of global currencies, and the low or even negative correlation of many currencies with stock markets ensures constant opportunities to trade. There is no need to sit on the sidelines for years during bear markets.

Although forex has a reputation as risky, it is actually an ideal place to get started with active trading. Currencies are generally less volatile than stocks, as long as you don’t use leverage. The low returns for passive investment in the forex market also make it much harder to confuse a bull market with being a financial genius. If you can make money in the forex market, you can make it anywhere.

Finally, the forex market offers access to much higher levels of leverage for experienced traders. Regulation T sharply limits the maximum leverage available to stock investors in the United States. It is usually possible to get 50 to 1 leverage in the forex market, and it is sometimes possible to get 400 to 1 leverage. This high leverage is one of the reasons for the risky reputation of currency trading.

New forex traders should not use high leverage. It is best to start using little or no leverage and gradually increase it as profits and experience grow.

Disadvantages for Passive Investors

Passive investors seldom make money in the forex market. The first reason is that returns to passively holding foreign currencies are low, similar to the money market. If you think about it, that makes sense. When U.S. investors buy euros in the forex market, they are really investing in the EU’s money market. Money markets around the world generally have low expected returns, and so does forex.

The benefits of the forex market for active traders are usually useless or even harmful for passive investors. Low trading costs mean very little if you do not trade very much. Using high leverage without a stop-loss order can lead to large losses. On the other hand, using stop-loss orders essentially turns an investor into an active trader.

Getting Started With Forex

The forex market was once much less accessible to average investors, but getting started is easy now. Many large brokerages, such as Fidelity, offer forex trading to their customers. Specialized forex brokers, such as OANDA, make sophisticated tools available to traders with balances as low as one dollar.

Top 5 Forex Risks Traders Should Consider

The foreign exchange market, also known as the forex market, facilitates the buying and selling of currencies around the world. Like stocks, the end goal of forex trading is to yield a net profit by buying low and selling high. Forex traders have the advantage of choosing a handful of currencies over stock traders who must parse thousands of companies and sectors. In terms of trading volume, forex markets are the largest in the world. Due to high trading volume, forex assets are classified as highly liquid assets. The majority of foreign exchange trades consist of spot transactions, forwards, foreign exchange swaps, currency swaps and options. However as a leveraged product there is plenty of risk associated with forex trades that can result in substantial losses. (For more, see: Forex Broker Summary: Easy Forex.)

Leverage Risks

In forex trading, leverage requires a small initial investment, called a margin, to gain access to substantial trades in foreign currencies. Small price fluctuations can result in margin calls where the investor is required to pay an additional margin. During volatile market conditions, aggressive use of leverage will result in substantial losses in excess of initial investments. (For more, see: Forex Leverage: A Double-Edged Sword.)

Interest Rate Risks

In basic macroeconomics courses you learn that interest rates have an effect on countries’ exchange rates. If a country’s interest rates rise, its currency will strengthen due to an influx of investments in that country’s assets putatively because a stronger currency provides higher returns. Conversely, if interest rates fall, its currency will weaken as investors begin to withdraw their investments. Due to the nature of the interest rate and its circuitous effect on exchange rates, the differential between currency values can cause forex prices to dramatically change. (For more, see: Why Interest Rates Matter For Forex Traders.)

Transaction Risks

Transaction risks are an exchange rate risk associated with time differences between the beginning of a contract and when it settles. Forex trading occurs on a 24 hour basis which can result in exchange rates changing before trades have settled. Consequently, currencies may be traded at different prices at different times during trading hours. The greater the time differential between entering and settling a contract increases the transaction risk. Any time differences allow exchange risks to fluctuate, individuals and corporation dealing in currencies face increased, and perhaps onerous, transaction costs. (For more, see: Corporate Currency Risks Explained.)

Counterparty Risk

The counterparty in a financial transaction is the company which provides the asset to the investor. Thus counterparty risk refers to the risk of default from the dealer or broker in a particular transaction. In forex trades, spot and forward contracts on currencies are not guaranteed by an exchange or clearing house. In spot currency trading, the counterparty risk comes from the solvency of the market maker. During volatile market conditions, the counterparty may be unable or refuse to adhere to contracts. (For more, see: Cross-Currency Settlement Risk.)

Country Risk

When weighing the options to invest in currencies, one must assess the structure and stability of their issuing country. In many developing and third world countries, exchange rates are fixed to a world leader such as the US dollar. In this circumstance, central banks must sustain adequate reserves to maintain a fixed exchange rate. A currency crisis can occur due to frequent balance of payment deficits and result in devaluation of the currency. This can have substantial effects on forex trading and prices. (For more, see: Top Ten Reasons Not to Invest In The Iraqi Dinar.)

Due to the speculative nature of investing, if an investor believes a currency will decrease in value, they may begin to withdraw their assets, further devaluing the currency. Those investors who continue trading the currency will find their assets to be illiquid or incur insolvency from dealers. With respect to forex trading, currency crises exacerbate liquidity dangers and credit risks aside from decreasing the attractiveness of a country’s currency. This was particularly relevant in the Asian Financial Crisis and the Argentine Crisis where each country’s home currency ultimately collapsed. (For more, see: Examining Credit Crunches Around The World.)

The Bottom Line

With a long list of risks, losses associated with foreign exchange trading may be greater than initially expected. Due to the nature of leveraged trades, a small initial fee can result in substantial losses and illiquid assets. Furthermore time differences and political issues can have far reaching ramifications on financial markets and countries’ currencies. While forex assets have the highest trading volume, the risks are apparent and can lead to severe losses.

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