which the exchange rate" is given. The basic point of Forex trading is to buy a currency pair if you think its base currency will appreciate (increase in value) relative to the" currency. In order to break even on a trade, a position must move in the direction of the trade by an amount equal to the spread. For example, if an exchange rate between the British pound and the Japanese yen was"d in an American newspaper, this would be considered a cross rate in this context, because neither the pound or the yen is the standard currency of the.S. Bid/Ask Spread, the spread of a currency pair varies between brokers and it is the difference between the bid and ask the price. If a traders account falls below the minimum amount required to maintain an open position, he will receive a margin call requiring him to either add more money into his or her account or to close the open position. He has a monthly readership of 250,000 traders and has taught 20,000 students since 2008.
Leverage, leverage is the ability to gear your account into a position greater than your total account margin. Forex brokers with low spreads are especially popular among scalping supporters, because this trading strategy means opening a lot of deals within one day, and under these conditions a commission may amount up to 100 pips. So, if you buy the eurusd you are buying euros (base currency) and selling dollars " currency if you sell the eurusd you are selling euros (base currency) and buying dollars " currency).
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More than 200 Forex Brokers in one Rating. However, if the exchange rate between the pound and the.S. Spread, the difference between the sell" and the buy" or the bid and offer price. The deposit required to open or maintain a position. If you open one standard lot of EUR/USD for 150,000 (100,000 x eurusd.5000) your leverage ratio is 15:1 (150,000 / 10,000). Jump To Next Chapter, part 3: Long or Short? So, whether you buy or sell a currency pair, it is always based upon the first currency in the pair; the base currency. Part 9: Common Forex trading mistakes and traps Part 10: What is Technical Analysis Part 11: How to Make a Forex Trading Plan Part 12: The Psychology of Forex Trading Part 13: Professional Price Action Forex Trading Strategies About Nial Fuller Nial Fuller. Part 1: Introduction What Is Forex Trading? To calculate the leverage used, divide the total value of your open positions by the total margin balance in your account. For instance, if a trader has 1,000 of margin in his account and he opens a 100,000 position, he leverages his acc ount by 100 times, or 100:1.