Forex Trading Course (Part 4)

By doing so you have bought U.S. dollars in the expectation that they will appreciate versus the Swiss Franc.

If you believe that the U.S. housing market weakness will hurt future economic growth, which will weaken the dollar,

you would execute a SELL USD/CHF order. By doing so you have sold U.S. dollars in the expectation that they will depreciate against the Swiss franc.

When you go to the grocery store and want to buy an egg, you can’t just buy a single egg; they come in dozens or “lots” .

In forex, it would be just as foolish to buy or sell 1 euro, so they usually come in “lots” of 1,000 units of currency (Micro),

10,000 units (Mini), or 100,000 units (Standard) depending on your broker and the type of account you have (more on “lots” later).

You can with margin trading!Margin trading is simply the term used for trading with borrowed capital.

This is how you’re able to open $1,250 or $50,000 positions with as little as $25 or $1,000. You can conduct relatively large transactions, very quickly and cheaply,

small amount of initial capital.Listen carefully because this is very important!You believe that signals in the market are indicating that the British pound will go up against the U.S. dollar.

You open one standard lot (100,000 units GBP/USD), buying with the British pound at 2% margin and wait for the exchange rate to climb.

When you buy one lot (100,000 units) of GBP/USD at a price of 1.50000, you are buying 100,000 pounds,

which is If the margin requirement was 2%, then US$3,000 would be set aside in your account to open up thYour predictions come true and you decide to sell. You close the

You now control 100,000 pounds with just US$3,000.We will be discussing margin more in-depth later, but hopefully you’re able to get a basic idea of how it works.

When you decide to close a position, the deposit that you originally made is returned to you and a calculation of your profits or losses is done.

This profit or loss is then credited to your account.What’s even better is that, with the development of retail forex trading,