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Questions about the Forex market

Making money trading Forex involves buying lower and selling higher or selling higher and buying back lower. Using leverage means that you are able to deposit a smaller amount of money to achieve the same buying power as you would have if you bought and sold the currencies outright.

In this example, Mary deposits $5,000 into her Forex trading account and nominates the leverage on her account to be 1:100. As a result of leverage, Mary’s buying power on her $5,000 deposit becomes $500,000. Mary decides to buy 0.1 lots of the AUD/USD par at a price of 0.99802. Three days later, the price of the AUD/USD is 1.04069 and Mary decides to close her position. Mary’s profit is calculated as (1.04069 – 0.99802) 426 pips. As Mary opened a position of 0.1 lots, she made a profit of $426, or $1 per pip.

Of course, should the AUD/USD have moved against Mary below the opening price of her trade to a level of 0.97802, Mary would have incurred a loss on the trade of (0.99802 – 0.95542) 426 pips. As Mary’s position size was 0.1 lots, she would have incurred a loss of $426 or $1 per pip.

It is important to be aware that when trading Forex you can also incur losses which can be greater than your initial deposit.
Forex is said to be one of the fairest and most transparent markets on earth. This is mainly because of the large number of market participants and sheer size and number of transactions. No one single country or bank can completely control the direction of a currency.
The main participants in the Forex market are central banks, commercial banks and investment banks, however, in recent years - since the advent of the internet - accessibility to the Forex market has increased, which has resulted in an increase in the number of non-bank participants. Nowadays, participants also include large multinational corporations, money managers, registered dealers, money brokers and private investors.
The most popular liquid currency pairs are those from countries with politically stable governments and well-respected central banks. The most popular currency pairs are those that are paired with the US dollar, these are nicknamed the ‘majors’ and account for around 85% of transactions. The most commonly traded pairs are the EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CHF and USD/CAD.
A variety of fundamental and technical aspects can cause an exchange rate to move. The most notable influences include interest rates, inflation and political stability. Sometimes, governments will buy or sell a currency in an effort to influence its value with a view to having a broader effect on the country’s economy. This is known as ‘central bank intervention’ and can have a significant impact on the value of a currency. Given the size and diversity of participants, no one single factor can influence the Forex market for any significant length of time.
Forex traders can use a variety of risk management strategies. The most common form of risk management is the use of stop loss and limit orders. Stop loss orders can be set within the MetaTrader 5 platform and are often used to force the closure of a position at a predetermined price in order to limit any potential loss. Limit orders work in much the same way as stop loss orders; however, they allow a restriction to be placed on the maximum price paid.
Forex traders use a variety of trading strategies based on technical and fundamental analysis. Nowadays, technical trading is becoming increasingly popular and traders are using a variety of technical indicators, such as trend lines, support and resistance levels, and numerous other methods, to identify short-to-medium term trading opportunities. Some traders choose to use fundamental analysis, which revolves around interpreting economic information including news, government reports and sometimes even rumour. Often, however, it is elements outside of technical and fundamental analysis that have the most dramatic effect on currency prices. This includes events such as central bank intervention, interest rate changes, political change or even war.
No, trading Forex has never been cheaper or more accessible. Traders can now trade on institutional grade pricing with a deposit of as little as $200 and leverage of up to 500:1. It is, however, important to remember that although trading on leverage can maximise profits, it can also amplify losses.

Questions about Trading Forex CFDs Online

Trading over the internet on the world’s most popular trading platform, MetaTrader 5, is easy.

Once you have downloaded and installed the trading platform, simply log in and double click on an instrument in the Market Watch screen. In the Order window that appears next, enter your desired trading volume and then click on ‘buy market’ or ‘sell market’. A market execution order will then be processed.

The MetaTrader 5 platform will automatically fill your order providing there are sufficient funds in your trading account. Your open position will appear in the trading terminal and the profit / loss and margin will be calculated in real time according to price movement.
‘Margin’ is the amount of money required in your account in order to open a position. Margin is calculated based on the current price of the base currency against USD, the size (volume) of the position and the leverage applied to your trading account. If you do not have sufficient free equity available, you will be unable to open a position on the trading platform. The free margin amount shown in the trading platform is the amount you have available to use should you wish to open additional positions.

Margin is calculated using the following formula:

Margin required = (current market price x volume) / Account leverage

In practice, this would be calculated as follows:
If you open a position of 0.1 (10000) in EUR/USD at the current market price of 1.35645 and your account has a leverage of 1:400, you would calculate the margin required as follows:
(1.35645 x 10000) / 400 = $33.91

In this example, the margin on this position would be $33.91; therefore, in order to open a position of this size you would require at least $33.91 in free margin in your trading account.
MetaTrader 5 allows pending orders to be set. Pending orders are stored on the trade server and are executed when the conditions set are met.
MetaTrader 5 allows trailing stop orders to be set from within the Trade terminal.
If you have no free margin, your positions will be stopped out. Under certain circumstances, your account balance can also become negative should the losses on the positions stopped out exceed your account balance.
The Deal Confirmation window displays a summary of the order that you have placed, including the order number, quantity (volume) and price the order was filled at. The date and time the order was placed is displayed in the Trade window.
MetaTrader 5 has a real-time position-keeping feature where you are able to see your account balance, equity, margin and free margin in real time in addition to the profit or loss on any open positions. This information can be found within the ‘Trade’ tab inside the Terminal section of the platform. Your account history can be found under the ‘History’ tab in the same area.
A ‘long’ position is much the same as entering into a BUY transaction, conversely a ‘short’ position is much the same as entering into a SELL transaction.
By way of example if you BUY 1 standard lot or 100,000 units of EUR against USD you are entering into a ‘long’ position. If on the other hand you sell 1 standard lot of 100,000 units of AUD against USD you are entering into a ‘short’ position.
There are no limits to the number of trades that you must place each month.
Yes, you may log in to multiple accounts on one platform using the MT5 Multi Terminal. You may also install several instances of the MT5 platform for each login.
Yes, it is possible to log in to your MetaTrader 5 account with the same username and password at the same time on different computers.
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