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Forex: Ways To Trade

by Lisa

 

Forex trading is a simple area; one must erase the idea that it is the most complex type of business and try to learn forex trading strategies. It is essential to compare information and make decisions from them but always remembering that judgment must be supported with specific valid reasons to ensure the reliability of the conclusion. Moreover, it is always vital that traders make decisions without forgetting their intuitions as a guiding tool on the trust they give to themselves which is ultimately the reason why most traders succeed.

 

Forex in its simplicity has a simple rule of calculation. The system of Forex is shown:

 

For example, the market margin for the EUR/ USD is 1.4806/09. If the euro will gain on the dollar, you will be buying 2 standard Lot in the Forex market. It will cost you 6,180 US dollars when you buy the 2 Standard Lot.

 

The initial margin deposit for this trade is $ 2962.The leverage we use is 100: 1 which is the accepted leverage in the market.

 

At an opportune time, let us assume that the euro gains over the dollar and the bid is now at $ 1.4903/06.With the current market bid, you decide to sell your 2 Standard Lot to gain profit of 100 pips.Selling your pair will actually sell 200, 000 Euros for $ 298, 060 US dollars. To get your profit, you deduct the buying amount to the selling amount; tha t would be $ 298, 060 US dollars- $ 296, 180 US dollars. The cash profit in this trade will be $ 1880 US dollars.

 

However, when the market bid for Euro will lose over the dollar, say the bid is at $ 1.4783/06.In this transaction, you will sell your pair at $ 295 720 US dollars. In this forex trading strategy, you will lose $ 340 US dollars as the difference between the selling price and the buying price which is higher than the selling price.

 

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