You have probably heard of people making money on the foreign currency exchange market. They invest small amounts and reap significant returns. If you are like many people, you may be wondering whether you can start trading and make money in forex. The answer is yes. Anyone can learn a forex trading strategy, open a forex account, and start buying and selling currency. However, before you rush off to open your trading account, it pays to understand how the forex market works and how forex traders make money. This article covers three primary areas in forex trading: what it is, standard terms, and how to get started.

Money Out of Foreign Exchange

Explaining Buying and Selling Currency

The foreign currency exchange or forex market is a massive network of retail and wholesale forex traders, each trying to benefit from the market’s various movements. Within the forex market, there are currency pairs. Each pair is made up of a base currency and quote currency. Some examples are EUR/USD and JPY/USD. When trading a currency pair, a trader buys a currency pair hoping that it will either go up or down, depending on whether they are long or short.

To access the forex market, you need a trading account, which is provided by forex brokers. With a trading account, you can open either a demo account, which has simulated money, or a live account, which you must fund. While currency trading can be lucrative, losing money is extremely easy, as explained in the leverage section below. With the basics out of the way, what is the difference between passive investing and active trading?

Passive Investing vs. Active Trading

Some foreign currency exchange traders approach forex as a passive longer-term investment like commodities and futures, which are governed by the commodity futures trading commission (CFTC).  While this is an option, such traders hardly make the returns that active traders make. Active traders, also called day traders, usually open and close positions within one or a few days. Their primary objective is to capitalize on the volatility (changes) currency pairs have throughout the day. If you want to make money as a forex trader, you must learn how to day trade rather than become a passive investor.

Foreign Exchange Trading Terms to Familiarize Yourself With

Forex trading has several essential terms that outline how the system works. Here, we describe the top four terms:

Forex Quote

Forex currencies are always quoted as pairs like EUR/USD, GBP/USD, or CAD/USD.  They are quoted this way because each foreign currency exchange transaction is a simultaneous buy and sell of each respective currency in the pair. In the pair, the currency to the left is the base currency, while the one to the right is the quote currency.

Long and Short

All orders placed in the forex market are either buy orders or sell orders. If you choose to buy, you hope that the market will go up so you can sell higher than you purchased, a position called going long. In contrast, when you put a sell order, you hope the market will go down so that you can repurchase your currency at a lower price. This is called going short.

Bid, Ask and Spread

Forex quotes are represented as either a bid or an ask. The bid price is the best price you can sell on the market, while the ask (or offer) price is the best price you can buy from the market. The difference between these two prices is called the spread and is set by the broker as a commission for every purchase and sell order.

Leverage and Risk Management

Leverage is the amount of money the broker is willing to “lend” you for each trade. For example, a leverage of 1:200 means the broker will lend you two hundred dollars for every dollar you commit to a trade. Risk management is the practice of limiting leverage and the number of trades plus using stop-loss orders to prevent massive losses.

Creating a Forex Trading Strategy

To make money out of foreign currency exchange, you need a trading strategy. There are standard trading strategies, but in practice, there are probably as many trading strategies as forex traders. That is because no two traders trade precisely the same. However, all traders use the following three building blocks:

Technical Analysis

Technical analysis is the study of price movement. The basic premise here is that historical price movements are predictive of future price movements. Therefore, by studying these cyclic price movements, traders can estimate where the price will go next. It is important to note that this approach is not about predicting price movement but estimating the probability of price movement.

Fundamental Analysis

Fundamental analysis is the study of social, political, and economic data and how it affects price movement. Since these three factors underpin supply and demand, closely monitoring them can tell a trader whether supply or demand forces are in control. Although you do not need a degree in economics or political science to undertake fundamental analysis, you will need to understand how various social, political, and economic drivers influence price movement.

Sentiment Analysis

Sentiment analysis is the study of how other traders are perceiving a currency pair. Are they optimistic about it (bullish) and willing to buy, or pessimistic (bearish) and more predisposed to sell? Sentiment analysis determines whether the bulls are in control or the bears, with each scenario pushing the price one way or the other.

Next Steps

What should you do next to start making some money on buying and selling foreign currency? Here are three next steps to consider:

1. Find a Reputable Broker

Reputable forex brokers are regulated in at least two countries, have adequate staff to handle customer queries, and are well-capitalized to absorb market shocks. You also want to find forex brokers with low spreads and who offer relatively high leverage, especially if you’re going to start with a small sum of money.

2. Choose a Trading Platform

A trading platform is what you will use to connect to the forex market. While there are many options on the market, not all perform at the same level. Download a few versions, test them on your computer and pick the one that performs best and has the features you need most.

3. Practice, Learn, Repeat

Open a demo account and practice your trading strategy. Since you are using simulated money, you can afford to lose money without feeling the pinch. It is best to use a demo account until you establish a system of consecutive successful trades.

4. Open a Live Account

Once you have a successful trading strategy, open a live account, fund it, and start trading. With proper planning and a bit of luck, you will be well on your way to making money out of foreign currency exchange trading.

Buying foreign exchange currency is sometimes necessary, especially when traveling or sending money to someone in a different country. If you are traveling, you might use your debit card to make purchases, but it is always good to have some local currency. When you do, you can quickly pay for things like transportation, street food, or make other informal payments. A helpful rule of thumb is to have around fifty dollars’ worth of local currency for contingency purposes. In this case, you will need to exchange your local money, for example, your Canadian dollars, to your destination country’s foreign exchange currency. 

In this article, we break down all you need to know about where to buy foreign currency both locally and when abroad.

Where To Exchange Foreign Currency

Where to Exchange Foreign Currency Locally

It is wise to plan and exchange your Canadian dollars for your destination country’s local currency. In this case, you have several options to pick from:

CanAm Currency Exchange

CanAm Currency Exchange offers some of the best currency exchange rates in Windsor. With exchange rates up to 2.75% better than interbank rates, buying foreign currency at CanAm saves you quite a bit of money. CanAm Currency Exchange offers both electronic funds transfers across Canada and in-person transactions at its outlet in 3234 Dougall Ave, Windsor, ON N9E 1S6.

Post Offices, Bank or Credit Union

Your local financial institution or post offices are your best bet when it comes to exchanging foreign currency at a reasonable rate. In Canada, the currency conversion rate in these institutions is based on indicators set by the Bank of Canada. When buying foreign currency, you can either visit a branch and purchase the currency, or make an order online, which may come with some charges.

Online Foreign Exchange Provider

You can also exchange your money using an online currency exchange service provider. They offer both in-person pick-up or delivery. Their rates differ from those of a bank but are slightly better than a traditional forex bureau. If you request a more substantial amount of foreign currency, they may give you a more favorable exchange rate or waive your delivery charges.

Traditional Forex Bureau

Traditional forex bureaus are typically strategically located at places like the airport, popular shopping malls, and other high-foot-traffic areas. While they are easily accessible, you may not get the best exchange rate. Traditional forex bureaus are an excellent option if you cannot access any of the other options above.

Where to Exchange Foreign Currency When Travelling

If you cannot buy foreign exchange currency before you travel, do not worry, you have some options once you arrive at your destination. 

Here they are, ranked from the best exchange rate to the worst:

Your Bank’s ATM Network

Using your bank’s ATM network to buy foreign currency can be convenient, safe, and fast. Depending on your bank’s policies, you can withdraw cash in the local currency straight from your checking account. The drawback of this method is that you have no option to negotiate the rate, and you will have to pay ATM fees for each withdrawal.

Foreign Bank Counters or ATMs

You can also buy foreign currency from a local financial institution. Walk into a branch and purchase local currency or use a local ATM that supports your card brand. Keep in mind that this method relies on local exchange rates, which may be influenced by factors like local interest rates and inflation.

Local Forex Bureaus, Hotels and Stores

If you must buy foreign exchange, you can do so at a forex bureau, hotel, or store. Since they usually offer vastly different rates from banks, you should only exchange the least amount you need.

Remember The Three Golden Rules of Exchanging Foreign Currency

Now you know where to buy foreign exchange currency, but there are some rules of thumb you should always keep in mind. They are:

1. Avoid exchanging foreign currency at the airport, hotel, or other tourist centers.

We have touched on this earlier in the article. The reason you should avoid these places is that they have high exchange rates. For example, if your bank adds five basis points to the exchange rate, these places may add up to twenty basis points. They do this because they anticipate that foreigners and tourists urgently need foreign currency. To avoid this, either exchange your money before traveling or only exchange a minimal amount and exchange a more substantial amount when you have access to a bank or ATM.

2. Always compare exchange rates beforehand.

Understanding what different exchange rates mean is essential in the foreign exchange process. If you are traveling from Canada to France, for instance, understand how the currency pair trades against each other. Doing so will help you understand the various quotes you will get when you exchange your money.

3. Cards and ATMs offer convenience at a cost.

Using your debit or credit card to buy foreign currency is easy and convenient but can come at a steep cost. Before using this method, always inquire from your bank what charges you will incur during currency conversion. The same goes for ATMs. ATM fees can mount if you are continually withdrawing foreign currency. If you must use your card or an ATM, withdrawing in batches is your best option.

In Summary

If you were wondering where you should exchange foreign currency, now you have some options. Once you understand the basics, it should be easy to buy foreign exchange currency, whether locally or when traveling. Whichever option you pick, always remember that you are in control of how much foreign currency you get for your money. If you are not happy with an exchange rate in one place, you are always free to visit a different place and request a better exchange rate.

Finding the best ways to send money abroad may help you periodically like when you travel or influence your daily life if you are a freelancer. Understanding factors like money transfers fees, currency exchange rates, and transfer timelines can mean the difference between getting most of your money at the end of the transfer, or forfeiting a considerable chunk. In this article, we cover the options you have for sending money overseas and tell you what the pros and cons of each option are.

Send Money Abroad

Factors to Consider First Before Transferring Money Overseas

Choosing the best ways for sending money overseas relies on what you need most from the transfer. For example, if you need speed, you may have to pay more for your transfer. Similarly, if you want the best currency exchange rate, you may have to wait a bit longer to get the money. Picking the best way to send money abroad involves a tradeoff of several factors, including: 

  • Whether you are sending one currency and receiving a different currency or sending and receiving the same currency
  • Currency exchange rates
  • The amounts of money you are sending (smaller amounts or larger amounts)
  • How fast you want the money sent and received
  • The sending country and receiving money country
  • The frequency of sending
  • Origination of funds (cash, bank account, business proceeds, Bitcoin, or credit card)
  • Transfer fees and how this will affect the total amount received or sent

It is important to note that no one money transferring service can tick all the boxes at once. Some will allow you to send money faster, but at a higher cost, while others will give you better rates for larger amounts and high transfer fees for smaller amounts.

Online Payment Providers


PayPal allows you to send money to one hundred and ninety countries in up to twenty different currencies. To complete the transfer, all you need is the recipient’s phone number or email, although they will need to create a PayPal account to access the funds. PayPal is a great money transfers option if you are sending smaller amounts (less than $500) and if the other person also has a PayPal account and can withdraw to their bank account or mobile wallets.


PayPal is very transparent when it comes to fees and exchange rates. Also, all you need is a phone number or email address to send money, making sending money as easy as sending an email or text message.


PayPal has opaque terms of service, and they can freeze funds or close your account with no notice. PayPal is also quite expensive when transferring large sums above $2,000, costing up to 4% of the total amount sent.

Google Pay

Google Pay works like PayPal. All you need is an email or phone number to send someone money. Google Pay charges no fees to send money, although you will incur a 2.9% processing fee. Google Pay is a good option if you are sending mid-range amounts (the transfer limit is $10,000), and if the recipient has access to Google Pay withdrawal methods (debit card or bank account).


Google Pay charges no transfer fees, which makes it a cheaper option than PayPal. The service also charges no fees to withdraw money either to a debit card or to your bank account.


Google Pay money transfer services are only available in the United States, UK, and India. This limited coverage makes it a poor option if you want to send money to other countries besides these.

Other Online Payment Providers

  • Xoom
  • Skrill
  • Neteller 
  • Amazon Pay

Money Transfer Service Providers

Western Union

Western Union has over four thousand locations worldwide and offers options to send money internationally via their website, a physical location, your bank, or a mobile app. Recipients can get cash in their mobile wallets, bank account, or pick up at a physical location. Western Union money transfers are best for sending money fast and allowing the recipient to access the funds conveniently.


You can choose to send money and have it immediately available to the recipient. Also, recipients do not have to open an account or even have a bank account, which makes it easy, especially when sending to individuals moving from country to country.


For faster transfers, Western Union fees and currency exchange rates can be high. Sending money is also more complicated since you must input multiple identity details of the recipient.


TransferWise is a hybrid between a traditional money transfers service and an online payment provider. They differentiate themselves by offering actual currency exchange rates and allowing you to open a virtual bank account from which to send and receive money from other international bank accounts. TransferWise is an excellent option for freelancers and individuals who work with foreign contractors due to the ability to wire money directly from bank account to bank account.


You get the actual currency exchange rate when sending money, and all you pay is a standard transfer fee. The service offers virtual multi-currency bank accounts, allowing you to send or receive money using same-currency accounts.


Money transfers are not instantaneous, and you may be subject to lower transaction limits if you do not have a business account.

Other Money Transfer Service Providers

  • MoneyGram
  • WorldRemit 
  • Travelex 
  • Remitly 
  • Ria


Wire Transfer

Sending a wire transfer from one bank to another is another way you can send money abroad. In this method, both parties must have a bank account, even if in different banks. Wire transfers typically take between one and five business days to complete. Wire transfer is a good option if you are making business payments or transferring large amounts that you need available in the other bank account.


Bank wire transfers are preferable when sending large sums because of the increased security. The money is also deposited in a bank account, which makes it easy to spend using other payment methods like PayPal, Google Pay, and others.


Bank wire transfers have notoriously high currency exchange rates. While fees are typically fixed, you can expect a currency exchange rate that is up to 10% of the total amount you are sending.

Intrabank Money Transfers

If your bank has a branch in the recipient’s country, you can easily perform an intrabank transfer from your local bank account to a bank account held in the foreign bank. Intrabank transfers are a great option if you have bank accounts in banks that have an extensive international footprint like HSBC, Barclays, and Citibank.


Some banks offer free intrabank transfers, even if the transfer is from one country to another. Additionally, you can open same-currency accounts in both countries and make significant savings on currency exchange rates.


Not all banks have a strong international presence. Moreover, if you are only sending money periodically or when traveling, it makes little sense to open and operate a bank account in a foreign country.

Other Bank Options

  • Money orders 
  • Traveler’s checks 
  • Banker’s checks 
  • Debit cards 
  • Credit cards

Currency Exchange Brokers

Currency exchange brokers specialize in exchanging your currency and sending the funds to a recipient bank account. One standout feature of this service is that you get a live exchange rate quote. That is, they give you a quote that if you do not like, you can reject and wait for a better rate. Currency exchange brokers are a great option if you want enhanced control over the currency exchange rate you get.


The service offers live exchange rate quotes, allowing you to get the best current rate for your transfer. Recipients get money in any country in which they have a bank account.


Currency exchange brokers offer a limited range of services, with transfers limited only to bank-to-bank transfers. You also need a working knowledge of currency exchange rates to pick the best rate.

Currency Exchange Broker Examples

  • OFX 
  • WorldFirst
  • XE 
  • TorFX
  • Currencies Direct


Cryptocurrency is a new entrant in the international money transfer arena. Sending money abroad via cryptocurrency involves both parties having a cryptocurrency wallet. To send money, you will need to open an account with a crypto exchange like Coinbase or Kraken, fund your account, purchase cryptocurrency, then send the funds to the recipient’s wallet. Fees associated with such transfers are typically low, and transfers conclude within minutes. 


Sending money is extremely cheap and relatively fast. You can also benefit from changes in cryptocurrency prices since they tend to have high volatility.


You need to be tech-savvy to send money through cryptocurrencies. Some banks have blacklisted cryptos, so you may not be able to fund your crypto account from your bank account or withdraw money from a crypto wallet.

Cryptocurrency Mobile Wallets Service Providers

  • Coinbase
  • Kraken
  • Binance

Final Words

As you can see, there are many options for sending money abroad. Choosing the best ways to send money abroad depends on your priorities and the factors listed at the start of this article. Our advice is that you weigh your options and pick the one that meets your most urgent needs, whether that is the speed of transfer, low transfer fees, excellent exchange rates, or ease of collection.


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