For practical reasons, Lydian currency took on the form of a round coin, which became the first ever standardized unit of currency. Paper currency, on the other hand, was invented in Asia and was brought back to Europe by Marco Polo after his travels to Asia. Modern currency is much more uniform and regulated.
Major currencies in the world today take on the physical form of paper bills or coins which are easily carried on a person, but most of a person's currency is typically stored in digital accounts. The value of these currencies is backed by the promise of their issuing governments, which makes them fiat money currency declared by the government to be an official medium of payment but is not backed by a physical commodity.
Before fiat money existed, currencies were usually backed by a commodity such as gold or silver. While modern currency is physically represented by coins and paper bills, most large-scale currency transactions are done electronically. Modern technology utilizes sophisticated currency exchange mechanisms and systems to exchange currencies between digital accounts rather than physically.
Even the exchange of currency for everyday goods and services such as groceries or haircuts involves physical currencies less and less due to the growing popularity of debit cards, credit cards, and mobile payments.
Cryptocurrencies are digital currencies operating independently of a central bank or authority, in which encryption techniques are used to regulate the generation of units of currency as well as to verify the transfer of funds. The current technology behind cryptocurrencies is called blockchain, which is a decentralized ledger of all transactions across a peer-to-peer network.
A prominent feature of blockchain is that participants can confirm transactions without the need for a central clearing authority, such as a central bank or government. The value of cryptocurrencies fluctuates, just like a regular currency, and they can be traded in the same way as any other currency.
Some experts say that there is a slight chance that cryptocurrencies become the currency of the future. For the purposes of this calculator, Bitcoin is the only cryptocurrency available for conversion at the moment. Currencies used in different countries are rarely, if ever, exactly equal in value.
As a result, exchange rates the rate at which a currency is exchanged for another exist to enable the equal exchange of currencies. Real-time exchange rates are supplied by the foreign exchange market forex , the same place where most currency transactions take place.
The forex is a global, decentralized, over-the-counter market for the trading of currencies. Each day, trillions of dollars US worth of currency are traded. The market functions at high speeds, with exchange rates changing every second. The most common forex transactions are exchanges between the U.
A forex quote always consists of two currencies, a base currency and a quote currency, sometimes called the counter currency. The following is an example of a forex quote:. The base currency always equals exactly one. In the real world, most exchange rates are given in terms of how much a U. The euro is different in that it's given in terms of how much a euro is worth in U. When buying foreign currencies, there are usually two prices listed: the buying rate and the selling rate. They are sometimes called the "bid price" and "ask price" for the currency pair, respectively.
A few winning trades and you have made that loss back. The reward-to-risk ratio is how much you make on winning trades relative to how much you lose on losing trades. That means you are making 1. To accomplish this, place a profit target that is a greater distance from your entry point than your stop loss is. That is a reward-to-risk ratio of 0.
Reward-to-risk is interlinked with the win rate. The win rate is how many trades you win, expressed as a percentage. Win rate is interlinked with reward-to-risk. Suppose you can maintain a 1. You are adding 1. Do you see how win rate and reward-to-risk are linked?
Alternatively, you could try to reduce risk slightly or increase your reward slightly to improve your reward-to-risk. Slight adjustments could push this break-even or losing strategy toward being a profitable one. If you can do that, the more trades you take that still allow you to maintain those statistics, the better.
If you make one trade per day, that is about 21 trades per month. If you only trade a two-hour period —which is all that is needed to make a living from the markets this is the end result, and at the beginning, you will want to put in at least several hours per day of study and practice —you should be able to find between two and six trades each day that allow you to maintain the statistics mentioned above. Note that some days produce no trades, because conditions aren't favorable, while other days may produce 10 trades.
Don't take trades for the sake of taking trades though; that will not increase your profit. If you take trades with a poor probability of winning, or where the reward doesn't compensate for the risk, this will drag down your statistics, leading to a lower return or a loss. If any of these statistics get out of whack, it will hurt your results. It's a razor-thin line between profitable trading and losing.
Over trades, winning 50 means a nice income, while winning only 40 means you break even or lose money when accounting for commissions. A slight drop in win rate or reward-to-risk can move you from profitable to unprofitable territory. Risking too much on each trade can decimate your account quickly if you hit a losing streak. Wins and losses are distributed randomly.
Some days, you may lose all the trades you take, while other days, you may win them all. There is no specific number of trades you should, or need, to take each day. The only way to know if a strategy can produce the numbers above or better is to test that strategy out in a demo account.
Take hundreds of trades, and if the strategy produces the results above or better , then you have some assurance—but no guarantees—that the strategy can produce those figures in the future. Small adjustments may be required over time to keep the strategy aligned with the numbers above. If a strategy produces those numbers, then only trade that strategy.
The statistics above apply whether you trade stocks, forex, or futures —the main day-trading markets. Your percentage returns will be similar in each if you create or follow a strategy that maintains the statistics above. Which market you choose shouldn't be based on return potential, as they all offer similar returns. Rather, base your decision on which market you are most interested in and the amount of starting capital you have.
Your initial trading capital is a major determinant of your income. Choose the market you are most interested in that allows you to trade with the capital you have available. The less capital you have, the longer it will take to build up your capital to a point where you can make a livable monthly income from it.
The more capital you have, though, the harder it becomes to maintain those returns. There is only so much buying and selling volume at any given moment; the more capital you have, the less likely it is that you will be able to utilize it all when you want to. This is typically why only individuals or very small hedge funds can generate huge yearly returns, yet these returns are unheard of when discussing traders or hedge funds with very large accounts.
The main problem is that while you can see that the math works over 10 or trades, while you are in a trade, it is very hard to remember the big picture. Most new traders can't stand losing , and so they exit a winning trade with a tiny profit, messing up their reward-to-risk. That also messes up the reward-to-risk ratio and could potentially decimate their account.
New traders also need to remember that wins and losses are not evenly distributed. You may win or lose several trades in a row. A winning streak doesn't mean you are a phenomenal trader and can abandon your strategy. Likewise, a losing streak doesn't mean you are a bad trader. The only thing that matters is how many trades you win and lose out of , which is about how many trades you will take each month.
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Profit calculator is a simple tool designed to help you calculate your potential profits and losses depending on the outcome of the trade. Exchange Rate Query Tool - This query tool allows the user to retrieve exchange rates data from the IMF rates database, and view, print, or save the data. Forex: Get Live Forex Rates on The Economic Times. Find latest Forex News and Updates, Live Currency Rates, Currency Convertor and more.