When you decide to invest in the world of forex trading, what becomes your target is the profit opportunity from the price difference when the market fluctuates or price movements occur. One of the typical and advantages of forex trading is two-way profit opportunities.
Unlike a stock transaction that can only be done in one direction. You can only choose one position that is open buy only in the hope that the price of shares purchased can move up. Therefore, the profit opportunity in the stock market is only obtained when there is an increase in price.
Thus, what’s the difference between the two-way profit opportunities in forex trading?
Profit opportunities when prices rise
Trade Forex by buying at low prices and selling them at high prices. For example, you choose GBPUSD pair transactions. When you buy 1 GBP at the price of 1.3000 USD, then you predict within an hour then the GBPUSD exchange rate rises. When your prediction is correct and GBPUSD is at 1.3100, you close the position with GPB sell. The difference between the capital and the sale proceeds can be a profit for you.
Profit opportunities when prices fall
In Forex trading, you also still have a chance to make a profit when prices fall. When you predict the GBPUSD exchange rate will go down, then you decide to sell GPBUSD at 1.3100. After your prediction is correct, you close the position by buying GBPUSD at a lower price when you sell at 1.2900. You still have profit from the difference between the sale and buy.
However, according to The Balance, you should carefully prepare before entering the market to maximize your trading profits.