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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.

 

Forex in its simplicity has a simple rule of calculation.The mechanics of Forex is shown::

 

For example, the market margin for the EUR/ USD is 1.4806/09. On the event your analysis tells you that the Euro will eventually gain on the dollar; so, you buy 2 Standard Lot in the market. It will cost you 6,180 US dollars when you buy the 2 Standard Lot.

 

You need to make an initial margin deposit of $ 2962.The leverage we use is 100: 1 which is the accepted leverage in the market.

 

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.Selling your pair will actually sell 200, 000 Euros for $ 298, 060 US dollars. To get your profit, you deduct the buying amount to the selling amount; tha t would be $ 298, 060 US dollars- $ 296, 180 US dollars. The amount you will be earning in this trade is $ 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. With this forex trading strategy, you will be losing $ 340 US dollars when you trade forex.

 

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