Well, now you know what Forex is and where and when the business is. But I think you want to know how to trade. How you can buy and sell forex? It may seem a bit 'confusing at first, but it is actually quite simple.
Forex is an instrument of leverage, such as options, futures, CFDs, options, etc. So this is nothing new.
Forex Trading Pip
Dealing in foreign currency "lots." This is basically the industry standard, but there are a broker to do things differently. For example,Oanda trades in "units", but can be easily converted to a batch size.
Many are known by different names, depending on the amount of currency they represent.
There are a lot of series, a mini-lots and lots of micro.
A standard amount corresponding to 100,000 units of base currency
A mini-bundle is 10,000 units of base currency and
A micro-section of 1,000 units of base currency.
How many tickets you can buy or sell depends on a couple ofThings.
- Your account balance
- Use your designated trade, and
- How much risk are you willing to trade
This is when I call the 'margin' words 'leverage' and 'risk'. All the words that are important, but not a necessity, you get all stressed how they can all be controlled and I'll show you an easy way to stay out of trouble.
Margin means the only money you have in your account, available for trade. As already said, is a lever forexInstrument, so if your broker offers you 100:1 leverage, then for every unit I, who have in your account, you can control 100 units. Some brokers offer leverage up to 400:1. If you have more leverage and a trade goes against you, and you decide not to intervene, your broker will close the trade on your behalf to protect their interests, even if you've blown your account. It is one thing that worries me, as my risk is run of all trades. Risk refers only to what isare willing to risk on a particular trade in dollars.
Now for the lot and the pip value equivalent. Just to refresh your memory, if the EUR / USD moves from 1.3924 to 1.3928, moved a total of 4 pips, and if the USD / JPY moved from 95.23 to 95.19, but also moved 4 pips. Pretty simple so far.
If I trade a standard lot ($ 100,000), then each pip is worth $ 10 So in the above EUR / USD, for example, the move 4 pips and you were trading 1 standard lot, 4 pipsequivalent to $ 40. The same U.S. $ 10 per pip is also true for the GBP / USD, EUR / USD and NZD / USD.
This is the easy part. Now all other forex pairs are not so easily due to the fact that the USD does not constitute an offer or counter currency. What may need to look at here is the conversion between the two pairs of mathematics and a little 'confused. I think that makes it easy and watch all the couples at a value of 1 pip for U.S. $ 10. Almost all Forex pairs, with the exception of the EUR / GBPhave a pip value of less than U.S. $ 10, and most are only at this level, but they do fluctuate with the fluctuations of exchange rates.
If you need to know the exact pip value, there are many free web sites with a built-in calculator to do math problems for you.
Here's a link to a calculator Forex Pip
http://www.fxdd.com/en/forex-trading-tools/pip-calculator.html
Most traders and commercial lots standard or mini lots. As already mentioned, is slightly Oandadifferent here than they have units that can be very useful for precise money management trading.
Okay, if 1 pip equals $ 10 on a standard lot ($ 100,000), then one pip on a mini lot ($ 10,000) must be equal to 1 U.S. dollar and a pip on a plot of micro ($ 1,000) value of $ 0.10. Simple! And so it is very simple and easy, just think of any pair Forex is the same. I know a USD / JPY pip is $ 10, but it's close enough for me, take care not because the exact value. If your trading style is influencedact on the exact price on your Forex pair pips, then you have something like the calculator to use up to work, the exact values.
We enter a trade, for example:
I have $ 2,235 in my trading account, and I look forward to the 2% to trade at risk.
I'm looking in my brokerage account to their graphs, and I see a nice set up the EUR / USD, where I'm looking to purchase 1.3928. I will place my stop (stop loss) at 30 pips below 1.3898. So my risk for thisTrade 30 pips.
Now I need to know what size my position where I can not risk more than 2% of the balance of my account totaling $ 2,235 clock. This corresponds in reality to $ 44.70.
The easiest way it works is as follows:
Balance of risk multiplied by the percentage of risk-sharing, the size the same position.
In this trade, the math would look like this:
$ 2,235 x 2% = $ 44.70
Pips $ 44.70 / 30 = 1.49
Therefore, my position on this dimensionTrade would be 1.49 mini lots. They should apply to both a Mini-Lot, or 1.4 mini lot of turn, if your platform allows business this size.
If you are not sure about the size of the position, either in standard or mini-lots, not simply to confirm the math backwards. You know, the maximum risk is $ 44.70 on this trade. If you entered the trade with 1 mini lot, you know, each pip is worth $ 1, so if you were stopped out, then it would be $ 30, they lost to the maximum risk of $ 44.70,Total due to the fact that you had size rounded position.
Just another example of a much larger bank account and stop the different amount of risk and placement.
Account balance is $ 37 840, the commercial risk is 3%, and you are ordering, the GBP / USD at 1.4562 to sell with a stop at 1.4607, which is 45 pips.
We try to understand the mathematics of my position size.
$ 37,840 (balance) x 3% (risk-share) = $ 1,135.20
$ 1,135.20 (maximum risk) divided by 45(Stop) = 25.226 '
Because my position size 25.226 'mini-lots, shall be rounded up to 25 mini lots or 2.5 standard lots.
Mathematics are listed in reverse order, if you check the size of the position. You know the maximum risk of $ 1,135.20, and the stop is 45 pips, and each pip is worth $ 10 on a standard lot. If you're going to lose up to 45 pips with 2.5 a lot, then 45 x 2.5 x 10 = 1125, which is $ 1,135.20 under the risk.
It may seem a bit 'confused, but it is very easy if youthe hang of it. With this formula, you should never worry about the leverage, margin, or the risk. Not only are they in it. But that said, it all depends on your level of risk and the percentage of your actual trading methods. You need a successful method of business because the risk if you do not just, say 2% for business, you will eventually shut down your account. It will take just a little 'longer for this reason that if you run the risk of 10% of each transaction to achieve.
It 'been a good dealInformation in this article, and it was pretty important information. In the next article in this speech will go a little 'over and risk, etc.
How do you actually trade Forex?
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Forex Bond
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