Forex trading works through the buying and selling of currencies with the aim of profiting from fluctuations in exchange rates.

CFDs in Forex Trading: Contracts for Difference (CFDs) allow traders to speculate on the price movements of forex instruments (Currencies, commodities, Indices) without owning the underlying currencies. Traders enter into an agreement to exchange the difference in the value of a currency pair from the time the contract is opened to when it is closed.

Profit and Loss: Traders aim to profit by buying a currency pair at a lower price and selling it at a higher price, or by selling at a higher price and buying it back at a lower price. The difference between the buying and selling prices represents the profit or loss.

Leverage: Forex trading often involves the use of leverage, which allows traders to control larger positions with a smaller amount of capital. While leverage can amplify profits, it also increases the potential for losses.

Factors Influencing Exchange Rates: Exchange rates are influenced by various factors such as economic data (e.g., GDP growth, employment rates), geopolitical events, central bank policies (e.g., interest rate decisions), and market sentiment.

Making and Losing Money:

-Making Money: Traders make money in forex by correctly predicting the direction of currency price movements. Profits are made when they close a trade at a higher price than the entry price for long positions, or at a lower price for short positions.

-Losing Money: Conversely, traders lose money when they close a trade at a lower price than the entry price for long positions, or at a higher price for short positions. Factors such as unexpected market movements, incorrect analysis, or poor risk management can lead to huge losses.