Majors and Crosses

Intellectual Enterprises

Basic & Professional Forex Course

MAJORS , CROSSES , PIPS ????

Major Forex Currency Pairs.

Some Forex currency pairs are traded more heavily than others. The currency pairs that have the most volume consist of the "majors". It is widely agreed that the following 6 pairs are considered the majors:

EUR/USD

GBP/USD

USD/JPY

USD/CHF

USD/CAD

AUD/USD

Major Forex Currency Pair are those in which USD is included.

Cross Forex Currency Pairs.

Cross Forex Currency Pair are those in which USD is not included.

EUR/GBP

CAD/JPY

AUD/CHF
Pips

Market increments are measured in PIPs, or Percentage in Point.

A pip is the fourth except for Japanese Yen crosses, where a pip is the second digit.

Forex trader buys 1 standard lot of GBP/USD. The current exchange rate is 1.56150. Essentially this trader is buying £100,000 in exchange for $156,150.

 Assume the Forex market rate rose 15 PIPs to 1.56300 and the trader liquidates the position. The same £100,000 is now worth $156,300, the trader realizing a $150 profit

Read more....

Contract Size

Intellectual Enterprises

Basic & Professional Forex Course

CONTRACT SIZE & MARGIN CALLS ??

Contract Sizes

Standard Contract Size

Each standard lot traded in the Forex Market is a 100,000 unit (of the base currency) when trading one lot in a standard account, a trader is essentially placing a 100,000 unit trade in the market. Without Leverage, many investors would not be able to afford such transaction. 

Take the EUR/USD for example: leverage of 50:1 would allow a trader to place the same one lot ($100,000) trade with the post of $2,000 in margin. $100,000 divided by 50 equals $2,000, thus 50:1 leverage means that $200 of margin is able to control a $10,000 contract.

Mini Contract Size

Mini accounts are essentially 10% the value of standard accounts, meaning that mini contracts are 10,000 units (of the base currency). A trade of one mini EUR / USD lot would be a $10,000 trade. Trading with 50:1 leverage would mean that $200 of margin would control a $10,000 contract.

Margin Call

In the Forex market, a margin call typically means that their open positions will be automatically closed. While in other financial markets a client is called upon to send additional funds or the position(s) will be closed at market price.

The margin level is calculated by dividing the current equity in an account by the current amount of margin in use (used margin).

Margin Level Calculation = (Equity  / Current amount of margin in use)

A trader whose equity is at $1,000 and who is using a $500 of margin would divide 1,000 by 500 which of course equals 2. Then move the decimal two places to the right; this trader's current margin level or percentage is thus 200%. At 100% margin level a trader is essentially using their entire available margin. When the margin level drops to 100%, trades will automatically be closed.

Read more....

Leverage and Margin

Intellectual Enterprises

Basic & Professional Forex Course

UNDERSTANDING LEVERAGE  &  MARGIN ??

LEVERAGE

It is the ability to increase purchasing power in the market without it , and  trader would need to front $100,000 in order to control 1 mere standard contract in FX. The trader need only to provide a portion of the contract value, while the rest of the contract is provided by the broker or bank Traders can trade up to 50:1* leverage, which means the trader would only need to provide $2,000 in order to control the same 1 standard contract (valued at $100,000). Remember, the higher the leverage, the higher the risk.

either standard or mini lot sizes. As mentioned before, a standard lot is $100,000. A mini lot is essentially 10% the size of a standard lot, with 1 contract being valued at $10,000 - thus requiring only $200 in margin.

Traders always have the option of choosing a lower level of leverage. Doing so may help manage risk, but bear in mind that a lower level of leverage will mean that a larger margin deposit will be needed in order to control the same size contracts.

The amount of margin required to place a trade can be calculated using the following formula:

Margin = (Contract size / Leverage)

Traders can also take advantage of fractional lot sizes, which allow a trader to trade less than 1 lot, as low as 0.01 of a lot. A mini contract size of 0.01 would be a contract valued at $100, requiring only $2 in margin. These fractional lot sizes really allow traders to trade almost any contract size!

Read more....

What is Forex

Intellectual Enterprises

Basic & Professional Forex Course

WHAT  IS  FOREX  ??

Foreign exchange or FOREX is an off-exchange retail foreign currency market where participants purchase currency in exchange for another (at the current exchange rate).

1-    Tourists

2-   Investors

                  3-   Large Corporations

Go to watch for more details in urdu videos 

Read more....