Business Daily Media

SME Business News

The Basics of Forex Trading

  • Written by News Company

As a newbie trader, you should understand the basics of Forex before you trade. Here are the basics of online Forex trading.

In this article we will speak lot size, pip, and leverage (margin trading).

Lot Size

The lot size refers to the specific amounts in which currencies are traded. It is the number of currencies you buy or sell whenever you trade. There are three types of lot sizes and they are:

  • Standard

  • Mini

  • Micro

  • Nano

This classification is based on the units of currency each lot size contains. For standard lot size, there are 100,000 units of the base currency being traded. The mini lot size has 10,000 units of currency. The micro and nano lot sizes are 1,000 and 100 units respectively. The lot size is important because it influences the level of risk you will be taking per trade.

Pip

Forex traders earn profits through changes in the exchange rates of currencies. Conversely, they earn their losses through them, too. In fact, if the exchange rates of currencies did not change, there would be no need for speculative trades. But what is the unit of the measurement for this change?

The answer is “pip”. Pip measures the smallest value by which the exchange rate of a currency pair changes. That is, pips are the smallest percentage by which currencies change in value relative to one another.

As a trader, calculating the dollar value of pips might be a worthy knowledge. For instance, assuming you are trading USD/CHF at an exchange rate of 1.3666 on a mini lot account size (10,000 units), a pip change will be equivalent to 0.0001/1.3666 × 10,000 = $0.73.

Margin Trading/Leverage

Usually, currencies do not change that much relative to one another and that goes the same for those who are registered with www.q8trade.net. This would have made trading Forex uneconomically reasonable. Also, it would have been effectively inaccessible to small investors like you and me. However, the concepts of margin trading and leverage are exactly what make it a potentially lucrative endeavor.

Leverage allows you to control account sizes larger than your initial deposit, or your account size. That is, depending on the leverage, a deposit of say $1,000 could enable you to trade with up to $100,000 and even more. Then, you will be said to be trading on “margin.”

It is important to note that as leverage (and margin trading) can magnify your gains so can it also increase your losses. Hence, you should use it with caution.

ForexCT, the leading Australian provider of online Forex and CFD trading services, can help you achieve your trading goals. Whether you are an expert or a newbie, you will find the broker's offerings exciting.

For instance, the broker's customer support service is dedicated, with an account manager provided for every new client. Also, its comprehensive educational resources can help you to easily get started in the business and continually update your skills.

Business Daily Media Business Development

Reflections on stigma | ADHD is not a man’s disease | 3 women in business explain how it's a super power

For people living with attention deficit hyperactivity disorder or ADHD, daily life is made up of a series of challenges, where even simple tasks like getting out of bed and getting to w...

Business Daily Media - avatar Business Daily Media

CBA offers a zero interest business loan for Christmas

In a bid to give small businesses across Australia a much needed Christmas boost, Commonwealth Bank is offering a zero interest business loan and just one simple fee² paid over the...

CBA - avatar CBA

Riskline reveals top business travel risks for 2022

Natural disasters, extremism, elections and social unrest will join the continuing impact of Covid-19 across the world as the major threats and disruptions to travellers in 2022, ac...

Business Daily Media - avatar Business Daily Media

Supremacy Games to release unique mobile NFT racing game Race Team Rivals

Multiple NFT games in the pipeline, many titles based on global hit licensed properties - Auction to begin very soon! Helsinki, Finland - November 29, 2021 - Supremacy Games announce...

Business Daily Media - avatar Business Daily Media

Writers Wanted



NewsServices.com

Content & Technology Connecting Global Audiences

More Information - Less Opinion