Trading Currency Pairs

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.

In its simple idea, Forex has simple calculations. 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 proposed leverage is 100:1 and we will be using that.

Fortunately, the market marks the Euro gaining over the Dollar and the new trade bid is now at $ 1.4903/06.Using the current ask quote, you will be selling your 2 standard Lot at 1oo pips.It will actualize a price of 200, 000 Euros for $ 298, 060 US dollars. To compute the amount you will get out of this trade, you need to subtract $ 298, 060 US dollars and $ 296, 180 US. The cash profit in this trade will be $ 1880 US dollars.

But, if the ask quote or market bid fro Euro will fluctuate, lets assume the new bid is $ 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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