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To calculate your profits and losses in pips to your native currency, you must convert the pip value to your native currency. The following calculations will be shown using USD as an example.
When you close a trade, the profit or loss is initially expressed in the pip value of the quoted currency. To determine the total profit or loss, you must multiply the pip difference between the open price and closing price by the number of units of currency traded. This yields the total pip difference between the opening and closing transaction.
If the pip value is USD, then the profit or loss is expressed in USD, but if USD is the base currency, then the pip value must be converted to USD, which can be found by dividing the total pip profit or loss by the conversion rate.
You buy 10,000 Canadian dollars with USD, with conversion rate USD/CAD = 1.100. Subsequently, you sell your Canadian dollars for 1.1200, yielding a profit of 200 pips in Canadian dollars. Because USD is the base currency, you can get the value in USD by dividing the value by the exit price of 1.12.
10,000 CAD x 200 pips = 2,000,000 pips total. Since 2,000,000 = 200 Canadian dollars, your profit in USD is 200/1.12 = 178.57 USD.
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Why day trade once you get a good seat and the market is going your way. It is always more profitable to ride even the short wave for 2-10 days by adding up. In general, you must day trade only when you are losing. To find a buy entry seat for short-term trades, you can study the "accumulation and distribution patterns and 20 MA" in 8, 4 hourlies or 30 min "Line Charts" (or Candle Charts), together with MACD "overbought and oversold indicators" with its Patterns. If you study them for awhile you will understand when it the best entry point. The remainder is for money management and discipline and of course, experience. Good trades
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In the second part of the article, Fiorenzo gives a number of interesting tips relating to traders behavior and psychology. Again, some of the less known are:
Arent those tips good? Not too often such good pieces of advice are being given for free... You can read here all tips by Firenzo Fontana on how to avoid the pitfalls and start making more money in your forex trading.
Stan
Most forex brokers allow a very high leverage ratio, or, to put it differently, have very low margin requirements. This is why profits and losses can be so great in forex trading even though the actual prices of the currencies themselves do not change all that much—certainly not like stocks. Stocks can double or triple in price, or fall to zero; currency never does. Because currency prices do not vary substantially, much lower margin requirements is less risky than it would be for stocks.
Most brokers allow a 100:1 leverage, or 1% margin. This means that you can buy or sell $100,000 worth of currency while maintaining $1,000 in your account. Mini-accounts can have leverage ratios as high as 200.
The margin in a forex account is a performance bond, the amount of equity needed to ensure that you can cover your losses. Thus, you do not buy currency with borrowed money, and no interest is charged on the 99% of the currency’s value that is not covered by margin. The margin requirement can be met not only with money, but also with profitable open positions. The equity in your account is the total amount of cash and the amount of unrealized profits in your open positions minus the losses in your open positions. Your total equity determines how much margin you have left, and if you have open positions, total equity will vary continuously as market prices change. Thus, it is never wise to use 100% of your margin for trades—otherwise, you may be subject to a margin call.
So if you buy $100,000 worth of currency, you are not depositing $1,000 and borrowing $99,000 for the purchase. The $1,000 is to cover your losses. If the equity in your account drops below the margin requirement, then you will have to deposit more money, or the broker will liquidate your positions. Thus, buying or selling short currency is like buying or selling short futures rather than stocks.
Leverage is inversely proportional to margin:
Leverage = 1/Margin = 100/Margin Percentage
Margin Percentage = 100/Leverage
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Death is inevitable yet it is uncertain when it comes. A lot of Kenyans have invested in the online forex market and a good number of them receive their daily bread from online forex trading. But what really happens to our investment as forex traders when we die? Who takes away the trading capital in our forex accounts when we die? Could it bethe forex broker? Probably, I’m not certain.Download Forex Robot Copyright © 2016 -- Powered by Blogger
