Blogging and Forex ZRGRZMXMFVK3,
Market Order
Market orders mean traders will be trading at prices prevailing at the time. To Buy means buying price "ask" in effect at that time as well, or to Sell meant selling at a price "bid" in effect at that time also
Suppose you would buy a pair EUR / USD, the market was showing 1.2934/1.2938. This means your broker would buy the EUR / USD from you at a price of 1.2934 and 1.2938 for sell to you.
Sabtu, 13 Agustus 2011
Stop Orders and Limit Orders (Pending Order)
Blogging and Forex ZRGRZMXMFVK3,Stop Orders and Limit Orders (Pending Order)
Pending orders are orders to automatically open a Long position / Short only when the price of your order / message is reached. If the price that you order has not been reached, the pending order will still be active and will wait until the price touched that you order. Pending orders can be divided into 2 of Pending Order Pending Stop and Limit Orders.
If you just want to buy at ANY price now, use the Buy Stop Order. And if you just want to sell at BELOW the current price, use the Sell Stop Order.
If you just want to buy BELOW the current price, use the Buy Limit Order. And if you just want to sell at ANY price now, use the Sell Limit Order.
Example: ASK Price now is 2.0000 and you just want to buy (LONG) if the price moves to 2.0050 then you can use the Buy Stop Order. (Remember the open buy / Long price used is the price of ASK!)
Example: The current BID price is 2.0000 and you just want to sell (SHORT) if the price moves to 1.9950 then you can use the Sell Stop Order. (Remember the open sell / Short price used is the BID!)
Example: ASK Price now is 2.0000 and you just want to buy (LONG) if the price moves to 1.9950 then you can use the Buy Limit Order. (Remember the open buy / Long price used is the price of ASK!)
Example: The current BID price is 2.0000 and you just want to sell (SHORT) if the price moves to 2.0050 then you can use the Sell Limit Order. (Remember the open sell / Short price used is the BID!)
Pending orders are orders to automatically open a Long position / Short only when the price of your order / message is reached. If the price that you order has not been reached, the pending order will still be active and will wait until the price touched that you order. Pending orders can be divided into 2 of Pending Order Pending Stop and Limit Orders.
If you just want to buy at ANY price now, use the Buy Stop Order. And if you just want to sell at BELOW the current price, use the Sell Stop Order.
If you just want to buy BELOW the current price, use the Buy Limit Order. And if you just want to sell at ANY price now, use the Sell Limit Order.
Example: ASK Price now is 2.0000 and you just want to buy (LONG) if the price moves to 2.0050 then you can use the Buy Stop Order. (Remember the open buy / Long price used is the price of ASK!)
Example: The current BID price is 2.0000 and you just want to sell (SHORT) if the price moves to 1.9950 then you can use the Sell Stop Order. (Remember the open sell / Short price used is the BID!)
Example: ASK Price now is 2.0000 and you just want to buy (LONG) if the price moves to 1.9950 then you can use the Buy Limit Order. (Remember the open buy / Long price used is the price of ASK!)
Example: The current BID price is 2.0000 and you just want to sell (SHORT) if the price moves to 2.0050 then you can use the Sell Limit Order. (Remember the open sell / Short price used is the BID!)
Active period of Pending Order
Blogging and Forex ZRGRZMXMFVK3,Active period of Pending Order
GTC (Good Till Cancelled)
Good Till Cancelled means the pending order will remain active without any time limit, unless the trader did cancel it manually. Default of the GTC is a Pending Order
GTD (Good Till Date)
Good Till Date means the pending order will remain active until the time limit set
OCO (Order Cancels Other)
Order Cancels Other means traders ordered two pending orders at once. If one of the pending order is touched, then the other order will automatically be canceled
GTC (Good Till Cancelled)
Good Till Cancelled means the pending order will remain active without any time limit, unless the trader did cancel it manually. Default of the GTC is a Pending Order
GTD (Good Till Date)
Good Till Date means the pending order will remain active until the time limit set
OCO (Order Cancels Other)
Order Cancels Other means traders ordered two pending orders at once. If one of the pending order is touched, then the other order will automatically be canceled
Calculating Profit / Loss (Gain / Loss)
Blogging and Forex ZRGRZMXMFVK3,Calculating Profit / Loss (Gain / Loss)
The smallest price movement is calculated in units of points / pips. The value of each point will vary according to type of currency pairs (pair), the contract size is used.
Contract size is usually specified in units of lots, Standard lot (100,000), Mini lot (10,000), or Micro lot (1000).
There are three types of Currency Pair (Pair):
Direct Rates
Is a pair with USD as the counter currency (USD is located in the rear), example: GBP / USD, EUR / USD, AUD / USD, and NZD / USD
Indirect Rates
Is a pair with USD as the base currency (USD is situated in front), example: USD / JPY, USD / CHF, USD / CAD
Cross Rates
Pairs which did not contain the USD, for example: GBP / JPY, EUR / JPY, AUD / JPY, EUR / GBP, and GBP / CHF
For example, Direct Rates currency (GBP / USD, EUR / USD, AUD / USD, and NZD / USD) way of calculating profit / loss are as follows:
(Selling Price - Purchase Price) x contract size x lot = Calculation of profit / loss
Example:
Buy 3 standard lot EUR / USD 1.2000
Sell (liquid) 3 lots of EUR / USD 1.2010
Profit = (1.2010 - 1.2000) x 100,000 x 3 = $ 300
Sell one standard lot of GBP / USD 2.0001
Buy (liquid) 1 lot GBP / USD 2.0000
Profit = (1.2001 - 1.2000) x 100,000 x 1 = $ 10
Ending in a special currency / USD, there is a way that is easy calculations:
From the above conclusion, it means a profit of 1 point for standard lot (100K) Currency Exchange ending / usd profit is $ 10. While the value of 1 point for 1 mini lot (10K) is $ 1 and for micro lots (1K) per point is worth $ 0.1
For example, the currency Indirect Rates (USD / JPY, USD / CHF, USD / CAD) method of calculating profit / loss are as follows:
[(Selling Price - Purchase Price) / Price Liquidation] x contract size x lot = Calculation of profit / loss
Example:
Buy 1 standard lot USD / JPY 110.00
Sell (liquid) 1 lot USD / JPY 110.01
Profit = [(110.01 - 110.00) / 110.01] x 100,000 x 1 = $ 9.09
Currency Cross Rates For instance (GBP / JPY, EUR / JPY, AUD / JPY, EUR / GBP, and GBP / CHF) method of calculating profit / loss are as follows:
{[(Selling Price - Purchase Price) x Rate Base Currency Current] / Rate Pair Current} x contract size x lot = Calculation of profit / loss
Example:
Sell 1 lot of EUR / USD at price 0.6760 (EUR / USD is the base currency of EUR / GBP, because the front of the EUR / GBP is the Base Currency)
Buy (Liquid) EUR / USD at price 0.6750
Rate EUR / USD: 1.1840
Profit = {[(0.6760 - 0.6750) x 1.1840] / 0.6750} x 100,000 = $ 175.4
The smallest price movement is calculated in units of points / pips. The value of each point will vary according to type of currency pairs (pair), the contract size is used.
Contract size is usually specified in units of lots, Standard lot (100,000), Mini lot (10,000), or Micro lot (1000).
There are three types of Currency Pair (Pair):
Direct Rates
Is a pair with USD as the counter currency (USD is located in the rear), example: GBP / USD, EUR / USD, AUD / USD, and NZD / USD
Indirect Rates
Is a pair with USD as the base currency (USD is situated in front), example: USD / JPY, USD / CHF, USD / CAD
Cross Rates
Pairs which did not contain the USD, for example: GBP / JPY, EUR / JPY, AUD / JPY, EUR / GBP, and GBP / CHF
For example, Direct Rates currency (GBP / USD, EUR / USD, AUD / USD, and NZD / USD) way of calculating profit / loss are as follows:
(Selling Price - Purchase Price) x contract size x lot = Calculation of profit / loss
Example:
Buy 3 standard lot EUR / USD 1.2000
Sell (liquid) 3 lots of EUR / USD 1.2010
Profit = (1.2010 - 1.2000) x 100,000 x 3 = $ 300
Sell one standard lot of GBP / USD 2.0001
Buy (liquid) 1 lot GBP / USD 2.0000
Profit = (1.2001 - 1.2000) x 100,000 x 1 = $ 10
Ending in a special currency / USD, there is a way that is easy calculations:
From the above conclusion, it means a profit of 1 point for standard lot (100K) Currency Exchange ending / usd profit is $ 10. While the value of 1 point for 1 mini lot (10K) is $ 1 and for micro lots (1K) per point is worth $ 0.1
For example, the currency Indirect Rates (USD / JPY, USD / CHF, USD / CAD) method of calculating profit / loss are as follows:
[(Selling Price - Purchase Price) / Price Liquidation] x contract size x lot = Calculation of profit / loss
Example:
Buy 1 standard lot USD / JPY 110.00
Sell (liquid) 1 lot USD / JPY 110.01
Profit = [(110.01 - 110.00) / 110.01] x 100,000 x 1 = $ 9.09
Currency Cross Rates For instance (GBP / JPY, EUR / JPY, AUD / JPY, EUR / GBP, and GBP / CHF) method of calculating profit / loss are as follows:
{[(Selling Price - Purchase Price) x Rate Base Currency Current] / Rate Pair Current} x contract size x lot = Calculation of profit / loss
Example:
Sell 1 lot of EUR / USD at price 0.6760 (EUR / USD is the base currency of EUR / GBP, because the front of the EUR / GBP is the Base Currency)
Buy (Liquid) EUR / USD at price 0.6750
Rate EUR / USD: 1.1840
Profit = {[(0.6760 - 0.6750) x 1.1840] / 0.6750} x 100,000 = $ 175.4
Margin and Leverage
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Margin and Leverage
The term leverage (leverage factor, usually in a ratio of 1:50, 1:100, 1:250, or 1:500) in the forex margin trading means that if you want to trade for $ 10,000, you do not need to provide $ 10,000 but fairly, provide a margin of $ 100 ( leverage of 1:100) as a guarantee fund to your broker.
So the margin can be interpreted as guarantees held by the broker when you make trades. Margin would soon be returned to you after you close your account / liquid position you open.
Suppose you have $ 1,000 cash at the broker that has 1:100 leverage. This means you can trade with the amount to nearly $ 100,000 (or nearly as much of your capital 100X). This also means that to use a $ 100,000 contract size you need a 1% margin of $ 1000.
Another example: You have a capital of $ 500 and your broker has a leverage of 1:100, so if you want to buy using 1 mini lot (10,000) then the margin was detained for just 1% of the total contract sizenya (10,000) ie (1% x 10,000) or using a margin of $ 100.
This means that your capital will be held temporarily and are pledged as collateral / margin by the brokers is $ 100, the remaining $ 400 is used to hold your loss.
And when someday you have to liquidate that position then the margin of $ 100 earlier will be returned to you.
The advantage of the leverage is with a smaller capital you can trade with a number of contract size / lot the same as if you do not use leverage.
Or it can be said, with capital equal, you can use the contract size is greater than not using the leverage. So with the same capital, you have a chance to get profit per pip greater.
With or Without Leverage Leverage?
Leverage Margin Margin Requirements Contract Size Used Profit
1:1 (without leverage) 100% $ $ 1,000 $ 1,000 0.1/pip
1:100 1% $ $ 10 $ 1,000 0.1/pip
Leverage Big or Small?
Leverage Margin Margin Requirements Contract Size Used Profit
1:100 1% $ $ 1,000 $ 100,000 10/pip
1:200 0.5% $ 1,000 USD $ 200,000 20/pip
1:500 0.2% $ 1,000 USD $ 500,000 50/pip
Margin and Leverage
The term leverage (leverage factor, usually in a ratio of 1:50, 1:100, 1:250, or 1:500) in the forex margin trading means that if you want to trade for $ 10,000, you do not need to provide $ 10,000 but fairly, provide a margin of $ 100 ( leverage of 1:100) as a guarantee fund to your broker.
So the margin can be interpreted as guarantees held by the broker when you make trades. Margin would soon be returned to you after you close your account / liquid position you open.
Suppose you have $ 1,000 cash at the broker that has 1:100 leverage. This means you can trade with the amount to nearly $ 100,000 (or nearly as much of your capital 100X). This also means that to use a $ 100,000 contract size you need a 1% margin of $ 1000.
Another example: You have a capital of $ 500 and your broker has a leverage of 1:100, so if you want to buy using 1 mini lot (10,000) then the margin was detained for just 1% of the total contract sizenya (10,000) ie (1% x 10,000) or using a margin of $ 100.
This means that your capital will be held temporarily and are pledged as collateral / margin by the brokers is $ 100, the remaining $ 400 is used to hold your loss.
And when someday you have to liquidate that position then the margin of $ 100 earlier will be returned to you.
The advantage of the leverage is with a smaller capital you can trade with a number of contract size / lot the same as if you do not use leverage.
Or it can be said, with capital equal, you can use the contract size is greater than not using the leverage. So with the same capital, you have a chance to get profit per pip greater.
With or Without Leverage Leverage?
Leverage Margin Margin Requirements Contract Size Used Profit
1:1 (without leverage) 100% $ $ 1,000 $ 1,000 0.1/pip
1:100 1% $ $ 10 $ 1,000 0.1/pip
Leverage Big or Small?
Leverage Margin Margin Requirements Contract Size Used Profit
1:100 1% $ $ 1,000 $ 100,000 10/pip
1:200 0.5% $ 1,000 USD $ 200,000 20/pip
1:500 0.2% $ 1,000 USD $ 500,000 50/pip
Margin Calculation Method
Blogging and Forex ZRGRZMXMFVK3,Margin Calculation Method
There are three types of Currency Pair (Pair):
Direct Rates
Is a pair with USD as the counter currency (USD is located in the rear), example: GBP / USD, EUR / USD, AUD / USD, and NZD / USD
Indirect Rates
Is a pair with USD as the base currency (USD is situated in front), example: USD / JPY, USD / CHF, USD / CAD
Cross Rates
Pairs which did not contain the USD, for example: GBP / JPY, EUR / JPY, AUD / JPY, EUR / GBP, and GBP / CHF
Margin Calculation Method Direct Rates (GBP / USD, EUR / USD, AUD / USD, and NZD / USD):
Margin Percentage x Contract Size x Lot x Price Now = Margin
Example:
Sell 3 mini lots GBP / USD at Bid 2.0000 (Remember to use the bid open-Sell!)
0.01 x 10,000 x 3 x 2.0000 = 600 USD (leverage 1:100)
0002 x 10,000 x 3 x 2.0000 = $ 120 (Leverage 1:500) -> Needs a margin less than 1:100!
Margin Calculation Method Indirect Rates (USD / JPY, USD / CHF, USD / CAD):
Margin Percentage x Contract Size x Lot = Margin
Example:
Buy 2 mini lots of USD / JPY at 110.00 Ask (Remember to use the ask price of open Buy!)
0.01 x 10,000 x 2 = 200 USD (leverage 1:100)
0002 x 10,000 x 2 = $ 40 (Leverage 1:500) -> Needs a margin less than 1:100!
Margin Calculation Method Cross Rates (GBP / JPY, EUR / JPY, AUD / JPY, EUR / GBP, and GBP / CHF):
Margin Percentage x Contract Size x Price x Lot Middle (*) Now = Margin
Middle Price (*) = (Price Bid Price + Ask) / 2
(Do not forget Base Currency Currency is the basis of which lies in front of the pair. For example, pair EUR / USD -> EUR is the Base Currency, GBP is a QUOTE Currency)
Example:
Buy 1 mini lot EUR / GBP at 0.8020 Ask price (Remember to use the ask price of open Buy!)
Bid / Ask EUR / USD 1.5800/02 (because the Base Currency is the EUR, the price used is the price of EUR / USD)
Price was EUR / USD = (1.5800 + 1.5802) / 2 = 1.5801
0.01 x 10,000 x 1 x 1.5801 = 158.01 USD (leverage 1:100)
0002 x 10,000 x 1 x 1.5801 = $ 31.60 (Leverage 1:500) -> Needs a margin less than 1:100!
From the example above, we see that by using greater leverage, margin / capital needed for collateral is less
There are three types of Currency Pair (Pair):
Direct Rates
Is a pair with USD as the counter currency (USD is located in the rear), example: GBP / USD, EUR / USD, AUD / USD, and NZD / USD
Indirect Rates
Is a pair with USD as the base currency (USD is situated in front), example: USD / JPY, USD / CHF, USD / CAD
Cross Rates
Pairs which did not contain the USD, for example: GBP / JPY, EUR / JPY, AUD / JPY, EUR / GBP, and GBP / CHF
Margin Calculation Method Direct Rates (GBP / USD, EUR / USD, AUD / USD, and NZD / USD):
Margin Percentage x Contract Size x Lot x Price Now = Margin
Example:
Sell 3 mini lots GBP / USD at Bid 2.0000 (Remember to use the bid open-Sell!)
0.01 x 10,000 x 3 x 2.0000 = 600 USD (leverage 1:100)
0002 x 10,000 x 3 x 2.0000 = $ 120 (Leverage 1:500) -> Needs a margin less than 1:100!
Margin Calculation Method Indirect Rates (USD / JPY, USD / CHF, USD / CAD):
Margin Percentage x Contract Size x Lot = Margin
Example:
Buy 2 mini lots of USD / JPY at 110.00 Ask (Remember to use the ask price of open Buy!)
0.01 x 10,000 x 2 = 200 USD (leverage 1:100)
0002 x 10,000 x 2 = $ 40 (Leverage 1:500) -> Needs a margin less than 1:100!
Margin Calculation Method Cross Rates (GBP / JPY, EUR / JPY, AUD / JPY, EUR / GBP, and GBP / CHF):
Margin Percentage x Contract Size x Price x Lot Middle (*) Now = Margin
Middle Price (*) = (Price Bid Price + Ask) / 2
(Do not forget Base Currency Currency is the basis of which lies in front of the pair. For example, pair EUR / USD -> EUR is the Base Currency, GBP is a QUOTE Currency)
Example:
Buy 1 mini lot EUR / GBP at 0.8020 Ask price (Remember to use the ask price of open Buy!)
Bid / Ask EUR / USD 1.5800/02 (because the Base Currency is the EUR, the price used is the price of EUR / USD)
Price was EUR / USD = (1.5800 + 1.5802) / 2 = 1.5801
0.01 x 10,000 x 1 x 1.5801 = 158.01 USD (leverage 1:100)
0002 x 10,000 x 1 x 1.5801 = $ 31.60 (Leverage 1:500) -> Needs a margin less than 1:100!
From the example above, we see that by using greater leverage, margin / capital needed for collateral is less
Function Margin Leverage Against Resistance
Blogging and Forex ZRGRZMXMFVK3,Function Margin Leverage Against Resistance
For example, your initial capital deposit of $ 300. If you open a position trading mini lots (10000) requires margin: 10000 (mini lots) x 0002 (1:500) = $ 20. So while capital is held as collateral (margin) to open a mini lot gbp / usd is $ 20. So the rest of your margin to withstand the loss is: $ 300 - $ 20 = $ 280.
Profit from currency gbp / usd for mini lot (10000) is $ 1 per point (pip). So with the example above (the remaining margin is $ 280) you can calculate the strength to withstand the loss is $ 280 (left margin) divided by profit per point (pip) = 1 ie: 280 / 1 = 280 points. So the strength to withstand the maximum loss (before the margin call) is 280 points with the assumption that the currency you use is the gbp / usd with a profit of $ 1/point.
Compare with 1:100 leverage, which means you must provide a capital margin of 10 000 x 0.01, ie: $ 100 to open a position mini lots (10000) currency gbp / usd. The remaining margin to withstand the loss is 300-100 = 200. Profit per point gbp / usd mini lot is $ 1. So your strength to withstand the loss is 200 / 1 = 200 points only.
In conclusion: The leverage function doubles the value of your profits with a relatively small initial capital, while increasing your strength withstand loss.
For example, your initial capital deposit of $ 300. If you open a position trading mini lots (10000) requires margin: 10000 (mini lots) x 0002 (1:500) = $ 20. So while capital is held as collateral (margin) to open a mini lot gbp / usd is $ 20. So the rest of your margin to withstand the loss is: $ 300 - $ 20 = $ 280.
Profit from currency gbp / usd for mini lot (10000) is $ 1 per point (pip). So with the example above (the remaining margin is $ 280) you can calculate the strength to withstand the loss is $ 280 (left margin) divided by profit per point (pip) = 1 ie: 280 / 1 = 280 points. So the strength to withstand the maximum loss (before the margin call) is 280 points with the assumption that the currency you use is the gbp / usd with a profit of $ 1/point.
Compare with 1:100 leverage, which means you must provide a capital margin of 10 000 x 0.01, ie: $ 100 to open a position mini lots (10000) currency gbp / usd. The remaining margin to withstand the loss is 300-100 = 200. Profit per point gbp / usd mini lot is $ 1. So your strength to withstand the loss is 200 / 1 = 200 points only.
In conclusion: The leverage function doubles the value of your profits with a relatively small initial capital, while increasing your strength withstand loss.
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