EUR USD JPY

There are some currencies known in financial circles as “commodities currencies”. Their fortunes seem to be rising an falling in tandem with prices of raw materials. These are the “other dollars” CAD, AUD and, to a smaller degree, NZD.

These countries are large producers and net exporters of a wide range of physical commodities. Oil and gas, metals, forestry and a myriad of agricultural products are imported from those countries by the rest of the world, especially exploding Asian economies. Growing consumption is followed quickly by rising prices of those materials. That, in turn, pushes currencies in exporting countries to appreciate in value.
Huge run ups in AUD, CAD and NZD over last few years were the direct result of this phenomenon.

Than there is Russia. Since the break up of Soviet Union and virtual collapse of its economy, a lot of changes have taken place. Privatization brought much needed capital and improvement. Obsolete plants were either closed or modernized. Rising commodities prices brought Russia to the top level of world exporters in many, if not most, industrial commodities. (We will omit Russian political situation and it’s impact in this discussion.)

Second largest exporter of oil and largest exporter of natural gas. When it comes to metals they are leading producers of nickel, palladium, titanium, cadmium, tungsten. Russia ranks very high in production of copper, aluminum, steel, gold, silver and a long, long list of other metals. Same with timber. One must also remember that only a small portion of natural resources there has been tapped or even properly surveyed. In a few short years Russian foreign currencies reserves grew from about 70 Billions to well over 400 Billions at this writing and growing.

Russian Ruble(RUB) responded very favorably to these events. It appreciated in value against USD from 32/$ to 25/$ since 2004. Granted, it’s not a fully free traded currency. Very few brokers offer it, spread is wide. Definitely not an instrument for active trading. Lack of historical data makes it difficult to set targets and conduct any meaningful technical analysis. It is, however far more accessible and more freely floating then Chinese Yuan.

Long term traders, with a taste for the exotic, might want to pay attention to RUB. With volume steadily on the rise and growing need for raw materials, who knows? Perhaps in 5-6 years it will achieve the stature of NZD or even AUD.

The foreign exchange market, or Forex market, is an around-the-clock cash market where the currencies of nations are bought and sold. Forex trading is always done in currency pairs. For example, you buy Euros, paying with U.S. Dollars, or you sell Canadian Dollars for Japanese Yen. The value of your Forex investment increases or decreases because of changes in the currency exchange rate or Forex rate. These changes can occur at any time, and often result from economic and political events. Using a hypothetical Forex investment, this article shows you how to calculate profit and loss in Forex trading.

To understand how the exchange rate can affect the value of your Forex investment, you need to learn how to read a Forex quote. Forex quotes are always expressed in pairs. In the following example, your pair of currencies are the U.S. Dollar (USD) and the Canadian Dollar (CAD). The Forex quote, USD/CAD = 170.50, means that one U.S. Dollar is equal to 170.50 Canadian Dollars. The currency to the left of the “/” (USD in this example) is referred to as base currency and its value is always 1. The currency to the right of the “/” (CAD in this example) is referred to as the counter currency. In this example, one USD can buy 170.50 CAD, because it is the stronger of the two currencies. The U.S. Dollar is regarded as the central currency of the Forex market, and it is always treated as the base currency in any Forex quote where it is one of the pairs.

Let’s go now to our hypothetical Forex investment to show how you can profit or come up short in Forex trading. In this example, your pair of currencies are the U.S. Dollar and the Euro. The Forex rate of EUR/USD on August 26, 2003 was 1.0857, which means that one U.S. Dollar was equal to 1.0857 Euros, and was the weaker of the two currencies. If you had bought 1,000 Euros on that date, you would have paid $1,085.70.

One year later, the Forex rate of EUR/USD was 1.2083, which means that the value of the Euro increased in relation to the USD. If you had sold the 1,000 Euros one year later, you would have received $1,208.30, which is $122.60 more than what you had started with one year earlier.

Conversely, if the Forex rate one year later had been EUR/USD = 1.0576, the value of the Euro would have weakened in relation to the U.S. Dollar. If you had sold the 1,000 Euros at this Forex rate, you would have received $1,057.60, which is $28.10 less than what you had started out with one year earlier.

As with stocks and mutual funds, there is risk in Forex trading. The risk results from fluctuations in the currency exchange market. Investments with a low level of risk (for example, long-term government bonds) often have a low return. Investments with a higher level of risk (for example, Forex trading) can have a higher return. To achieve your short-term and long-term financial goals, you need to balance security and risk to the comfort level that works best for you.

The Chinese stock market has all but collapsed the past several weeks, falling off nearly 25% in a six week span overall capped by a 6.7% drop yesterday. The causes for concern in the Forex world relate specifically to the Dollar. 

As you might recall from several weeks ago, I spoke of the Chinese selling off some of their US treasuries and diverting that money to support their commodity purchases. 

This tactic is proving to be detrimental to the short term stability of the Chinese economy as with the information on the  stock exchange shows that industry is not moving which means the metals and durable goods  they are buying are sitting in warehouses instead of feeding the economic machine.

For the Dollar this is a signal that could spell out a difficult Fall/Winter once again, as China commits more money to helping their own corporations and diverts more and more funds away from Treasuries. 

Already, the US has held three Bond issue auctions in which the Chinese bought nothing – a fact that is not getting as much attention at this stage than it should.  I would bet, since my blogs have been a few weeks ahead of the mainstream news, that this will become a bigger deal in the coming months as more auctions go by and China continues sitting on the sidelines.

Aside from this we have the British Economy which is sputtering along as it seems the politicians are doing nothing. Political sensitivity aside, the Sterling has been suffering because the establishment in Parliament is still trying to get over a spending scandal which dominated the headlines for two months. 

They are timid and afraid to do anything significant for fear of more backlash, so they are also sitting and watching.  What Forex investors need is a clear sign from government that they are doing something, being proactive and working to turn the economy around instead of hoping that it will all by itself.

This week will be a slow one, many in the US are off for the week and Europeans are spending the last week catching the remnants of the summer sun. The ECB meets this week – don’t look for anything shocking there – they too are catching rays.

JPY. The Japanese Yen rallied on Monday as a 6.7 percent fall in the Shanghai Composite Index in China sent investors to the relative safety of the Yen for safety and was a big factor on the higher-yielding currencies most of the day. 

The Yen also rose in part on a post-election rally that saw the opposition party take over for the first time ever. The winning party called the Democratic Party of Japan is widely seen as to favor broader spending in government run social programs and economic stimulus programs. 

At 11:15PM GMT, the Yen was up .6% to the US Dollar, up .3% to the Euro to 133.43, up .35% to the British Pound to 151.71, up .43% to the Swiss Franc to 87.95 and up .2% to the Australian Dollar to 78.68. 

More Forex trading news. Trading was extremely quiet all around as the British markets were closed for a public holiday and many American’s on vacation in advance of the Labor Day holiday which marks the unofficial end to summer. The primary focus this week will be on the European Central Bank policy meeting on Thursday and the US non-farm payrolls figures which are due to be released on Friday. 

The Sterling fell 2.6% in August against the US Dollar, the largest fall of the year for the British currency.  The UK outlook is uncertain in traders eyes, despite official efforts to portray the situation as improving. Disappointing data, growing unemployment and rising consumer prices are cited as sources of the uncertainty.

The Chinese Shanghai Composite Index was down nearly 25% in the past 40 days which has raised concerns with American economists about the interest China will hold in future US treasury auctions. Their answer might come sooner than expected as they will have their first opportunity next week to see what, if any affect the drop has had.

The term Forex is short for foreign currency exchange market, and it refers to the direct trading of foreign currencies. Forex is actually a virtual network of currency dealers who are connected by means of telecommunications. This interbank market was originally created in 1971 when international trade changed from fixed to floating exchange rates. The Forex market is open 24 hours a day and the currency exchange operations are continued through working days of the week.

Forex is a worldwide market, so when you are sleeping in the United States, dealers in Europe can be trading currencies with their Japanese counterparts. It is the largest financial market in the world, with the equivalent of over $3-4 trillion changing hands every day whereas traded volume on the stock markets is only 500 billion US dollars. Forex is part of the bank-to-bank currency market which is known as the 24-hour interbank market.

Forex trading is becoming more popular every day and it is an exciting and fast-growing marketplace. Transactions are conducted within seconds online and the markets move quickly and take new directions all the time. Forex markets are not based in one place meaning there isn’t some large building on Wall Street where a load of people shout and waive dollar bills in an effort to get other people to buy them. Trading System Software to help investors in the foreign exchange market has been around for a long time, but just recently it has become extremely popular.

Trading Forex has become really accessible for the private investor because of the World Wide Web, and can be a recession proof business, but it must be noted that Forex is not a means of getting rich quick and executing foreign exchange orders with this aim in mind could well end in financial hardship. Trading in online Forex means that when you are investing in foreign exchange, you are buying one currency and at the same time selling another currency. Trading occurs over the telephone and through computer terminals at thousands of established locations, as well as within home-based trading businesses worldwide.

This article contains fairly basic information, but then I am sure there are many people in the world who don’t even know what Forex is, so I haven’t gone into any complex strategies here. In the foreign exchange trading markets there is always a risk that a trade will turn against you, and I must stress that the best way to learn the Forex market is to get some experience with live hands on trading. The single best way to learn how to trade in the Forex markets is to have a go.

Surely you had ever heard of pips and lots, but you know everything about these terms? How are they calculated? If this is not the case then this section is for you. 
To deal with Forex, it is essential to master these concepts. They will help you calculate your profits and losses and so set your stops correctly. 

What is a pip?
A pip is the smallest unit of change in exchange rates (see listings). As you can see, the currency pairs are quoted in 4 digits for most. A pip is the last decimal. If the EUR / USD rose from 1.4018 to 1.4019, this means that the euro has appreciated by one pip against the dollar. A pip is equal to 0.0001. In contrast to the USD / JPY, the pip has not the same since the quotation is not only two decimals. A pip is equal to 0.01. You will understand the value of a pip depends on the currency pair for each currency has its own value. It allows each transaction, depending on the currency pair on which you process, calculate your gain or loss. 

Now that you know what a pip, you can proceed to its calculation. The value of a pip is equal to the smallest unit of a pair of currencies / exchange rates 
Let our previous examples: 

For the USD / JPY, the smallest unit of measurement is 0.01 since the listing is done in 2 decimals. Suppose the USD / JPY 90.68 rating, and one deals with a batch of 100 000 Dollars Value of a pip (JPY) = 100 000 * 0.01 = 1,000 JPY 
The value of a pip is always calculated in the currency listed (here is the JPY) 

To know the dollar amount it can then do the following operation: 

Value of a pip (USD) = 1000/90.68 = 11.03 USD 

For the EUR / USD, the smallest unit of measure is 0.0001 since trading occurs in 4 decimal places. 
Suppose the EUR / USD 1.4018 and ratings that are dealing with a consignment of 100 000 Euros 
Value of a pip (USD) = 100 000 * 0.0001 = USD 10
The value of a pip is always calculated in the currency listed (here the U.S.) 

To know the euro amount, then just doing the following: 

Value of a pip (EUR) = 10/1.4018 = 7.13 EUR 

The value of a pip depends also on the price quotation currency.

What is Lot Size ?

Forex, it is possible to batch. It is the investment unit on the market. The standard size of a batch of 100 000E. But according to the type of account you open your broker, the lots are smaller. There are lots of 10 000E and 000E of 1. The latter is often the minimum size to deal Forex with many brokers. Does this sound great but do not panic. Indeed, the consignments are linked with the pips which as you know now are a unit measuring very small. It is therefore necessary to address significant quantities to make significant gains and losses. The lots will actually serve to increase the value of a pip.

Consider an example. You decide to treat using a set of 10 000E. The EUR / USD 1.4018 rating.

Value of a pip = (0.0001/1.4018) * 10 = 0.7133 EUR 000EUR
This means that if the EUR / USD is one pip or loses, you win or lose depending on your position 0.7133 EUR. The value of a pip is constantly evolving as it depends on the price side. However, once your stance on the market, the amount of your winnings or losses will depend on the value of a pip at the time of your entry. Thus, you can calculate your gains or losses.

The simplest remaining still set its gain or loss in money won or lost. The example for the EUR / USD would: gain or loss from $ 40 to a position of 10,000 is made on an upward (downward in the direction of trade) of 40 pips. (40USD / 10,000 = 0.0040 = 40 pips).

Practical Implementation

The EUR / USD rating 1.4018 / 1.4020. You expect a falling dollar. You then buy the euro.

1. Your entry price is 1.4020 (purchase price. 1.4018 is the selling price) since it is the price at which traders are willing to sell you the EUR.

2. You use a lot of 10 000E
The value of a pip is equal to 1 USD or (0.0001/1.4020) * 10000 = 0.7132E during 1.4018 / 20. A week later, you unbuckle your position. The EUR / USD 1.4050/1.4052 then rated Your exit price is to 1.4050, since this is the price at which traders are ready to buy the EUR.

Your gain is 30 pips, making a total of $ 30 or 21.35 euros ($ 30 during resale earned USD (1.4050 at the time of resale of the EUR / USD)

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Forex currencies are always traded in pairs. For example, EUR/USD, which means Euro over US dollars, would be a typical pair. In this case, the Euro, being the first currency can be called the base currency. The second currency, by default USD, is called the counter or quote currency. As mentioned, the first currency is the base, therefore in a pair you can refer the amount of that currency as being the amount required to purchase one unit of the second currency. So, if you want to buy the currency pair, you have to buy the EURO and sell the USD simultaneously. On the other hand, if you are looking to sell the currency pair, you have to sell the EURO and buy the USD. As a part of forex trading strategies the most important thing is to understand the currency pairs, or more precisely in a Forex transaction, what currency you will be selling or buying. Having good knowledge of major currencies of the world is important while learning forex trading.

Major currencies US Dollar The United States dollar is the worlds main currency a universal measure to evaluate any other currency traded on Forex. All currencies are generally quoted in US dollar terms. Under conditions of international economic and political unrest, the US dollar is the main secure currency, which was proven particularly well throughout the past Southeast Asian crisis. As it was indicated, the US dollar became the leading currency toward the end of the World War II, as the other currencies were almost pegged against it.

Euro The Euro was designed to become the premier currency in forex trading by simply being quoted in American terms. Like the US dollar, the Euro has a strong international presence stemming from members of the European Monetary Union. The currency stays plagued by inadequate growth, high unemployment, and government resistance to structural changes. The pair was also weighed in 1999 and 2000 by outflows from foreign investors, particularly Japanese, who were forced to liquidate their losing investments in euro-denominated assets.

Japanese Yen The Japanese Yen is the third most traded currency in the world; it has a much smaller international presence than the US dollar or the Euro. The Yen is very liquid around the world.

British Pound Until the end of the Second World War, the Pound was the currency of reference. The currency is heavily traded against the Euro and the US dollar, but has a spotty presence against the other currencies.

Swiss Franc The Swiss Franc is the currency of a major European country that belongs neither to the European Monetary Union nor the G-7 countries. Although the Swiss economy is relatively small, the Swiss Franc is one of the four major currencies, closely resembling the strength and quality of the Swiss economy and finance. Typically, it is believed that the Swiss Franc is a stable currency.

Canadian Dollar – Canada decided to use the dollar instead of a Pound Sterling system because of the ubiquity of Spanish dollars in North America in the 18th century and early 19th century and because of the standardization of the American dollar. The Province of Canada declared that all accounts would be kept in dollars as of January 1, 1858, and ordered the issue of the first official Canadian dollars in the same year.

Australian Dollar – The Australian Dollar was introduced in February 14, 1966, not only replacing the Australian Pound but also introducing a decimal system. Following the introduction of the Australian Dollar in 1966, the value of the national currency continued to be managed in accord with the Bretton Woods gold standard as it had been since 1954. Essentially the value of the Australian Dollar was dealt with reference to gold, although in practice the US dollar was used.

Human Trader Versus The Forex Trading Robots Will the Human Trader Become Extinct

Well humans have been trading with some degree of Success well before the Forex trading software bots came on the scene . So why is there all this fuss about Forex trading robots . Look at it this way dinosaurs were around million of years before humans , and they were successful at populating the earth . But they were big and slow and could not easily adapt to change , that’s why they died out . The human trader is also slow to adapt to the rapid changing markets , were as forex trading robots can adapt in seconds and spot winning and losing trades in a split second.

However if you have plenty of time to learn and study the workings of the forex market . As well as a large cash reserve to test your theories on market trends you may not be quite ready for the dinosaur grave yard yet .

On the other hand , if you want to be a lean mean trading machine, and you are eager to join the next evolutionary step in forex trading . Then you need to get a forex trading robot.

First let look at the Benefits of automated Forex Trading robot:

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Yes Forex Trading software is very impressive , however don’t assume you can just start it up and forget about it . You should from time to time monitor it progress . We recommend using a demo account first to make your familiar with the trading actions of the robot.

All Forex Trading robots are not the same , and of course out want to invest in the best to get the most profit.

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Forex market is witnessing a boom and a large part of population is investing money on it to earn huge profits. Online forex trading offers numerous advantages to its investors. Currency trading is especially appealing to the youngsters who want to make it big in life within a short span of time. It is nothing less than a fabulous business opportunity to earn fortune. Forex trading provides a great benefit in terms of leverage that enables the average investor to minimize the likely risks and earn grand profits. ACM, an ISO certified forex broker, offers 100:1 leverage, which means that by making an investment of 100 US dollars, you can trade in currency worth 10,000 US dollars.

Forex market enjoys a high liquidity. This in turn ensures that the investors can carry out the transactions on the spot by a mere click of the mouse. The investors can close the deal at their desired profit margin. The investors are at the liberty to stop the order anytime before it gets executed. Online forex trading enables you to earn profits even when the market is facing a slump. It ensures that you earn money irrespective of the fact that the currency pair is increasing or falling. It can be said that the bull or bear do not have much of scope to make the forex market insecure and risky. Well, that does not mean that the forex trading is going to turn out to be a 100 percent success. There is always some risk factor involved when it comes to any investment avenue then be it stock market or forex market. Trading in currency is indeed a risky affair. However, the loss can be reduced to a large extent by seeking the help of specialists such as ACM.

Forex market has another additional advantage in terms of convenience. You can trade anytime from any part of the world. It is accessible round the clock. ACM experts are all time available to render their services, which are especially useful for people running short of time and having high dreams in their eyes. ACM helps a great deal in making the investors learn the skills of trade. There are various types of user guides, which are of immense help. ACM experts reveal the golden tips on how to succeed in forex trading.

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Forex overview

What is Forex? Forex is an abbreviation of Foreign Exchange (also referred to as FX) and it is the largest financial market in the world.

The Forex market is the place where currencies are traded (currencies are money that is used as an exchange medium). In other words, it is the place where currencies are being sold and bought. In the Forex market all currencies are traded in real time.

Trading with currencies always means that there are two simultaneous transactions taking place. If a currency is being bought, it is also being sold. To better understand this notion, think of currencies as both the goods you are buying AND the method with which you’re paying for the goods.

Since the Forex market is the place where currencies are traded in real time, people may trade one currency for another and make a profit off of this transaction. Profits are made when one is able to determine which currency’s value will increase by the end of a pre-determined time period (such time periods may be short or long). The Forex market is open 24 hours a day, five days a week and it is based in four major cities: New York, London, Sydney, and Tokyo. The Forex market is open to individuals over the age of eighteen.

While Forex trading may sound daunting, it really isn’t. It can be easily comprehended and understood without prior experience in finance or economy. It is challenging and exciting, thought provoking and manageable, stimulating and filled with opportunities.

Some Forex Basics:

The first currency listed in a currency pair is called the “base currency”. The “base currency” is usually the U.S. Dollar. Traders will generally trade the U.S. Dollar against another currency, which is called the “counter currency”. Currencies are quoted in pairs. For example: The pair U.S. Dollar and JPY will be quoted in the following way: USD/JPY equals to 2.5 (This means that 1 U.S. Dollar can buy 2.5 JPY). When a quote increases, it means that the “base currency” has risen in value and the “counter currency” has weakened in value. For example: If the USD/JPY quote used to be equal to 2.5 but is now equal to 2.6, then this means that the dollar has strengthened (because 1 U.S. Dollar can now buy 2.6 JPY as opposed to the mere 2.5 JPY it could buy beforehand.)

Now that you know a thing or two about the market, we invite you to explore eToro—the Revolutionary Forex Trading Platform. You too can make your mark in the Foreign Exchange market. Use eToro as your gateway to the ever-growing world of Forex trading.

About eToro

Once upon a time, the Forex market was considered by many to be intimidation and over complex territory. Then along came eToro, with our daring belief in fair and equal opportunity which has lead us to develop a platform to bridge the gap between the individual trader and the high end world of international finance. The rest, as they say, is history.

Unlike other online forex trading platforms, eToro’s mission is to cater to the entirety of the Forex community. Here at eToro we make sure that the Forex community is well taken care of – from unique trading conditions to excellent customer service, not to mention remarkable practice opportunities together with constantly innovating trading technologies.

Finally there’s a user-friendly trading platform that is fun, easy to use, visually stimulating, and reliable. Traders no longer have to struggle with convoluted graphs and impossible calculations. Instead they can enjoy, learn, practice and trade in the exciting world of Forex. We make it possible for experienced and novice trader alike to take part in the largest financial market in the world.

So much for our end, but here at eToro we are also keen on developing an active and diverse community of users to enhance each other’s trading experiences. We believe that in addition to the know-how and experience of seasoned forex experts, there is much to gain from the day to day exposure to the thoughts and opinions of fellow traders. eToro’s goal is to facilitate a vital and thriving trading community, be it via forums, chats or exciting tournaments, in order to offer you yet another unique and significant advantage.

As you can see, it is no wonder that eToro has quickly become one of the most frequently visited trading platforms online. Nevertheless, we whole heartedly believe that rest is for the wicked and we are always eager to keep evolving in order to continue offering you the perfect trading experience.

Etoro Online Forex Traders Community

Here at eToro we believe that no trader is an island. The Forex market is affected by every private and professional trader that takes part in it, so if you want to get a clear picture of the market, there’s no better way to do it than to check in with your fellow traders.

One of the inventive ways you can do that with eToro is by using the Top Traders’ Insight tool which shows traders live updated rankings of the top 10 most popular pairs as traded by our 100 top traders. This tool enables you to use others’ experience when making your trading decisions and to get priceless strategy tips from the crème de la crème of our trading community.

Since eToro is a great learning tool for newbie traders, our community also serves as a kind of classroom where novice traders can get their bearings by discussing their trading experiences in chats or seeing what the pros have to say in our forums.

We also believe that there’s nothing like some friendly competition to get traders going. To spice up your trading week we provide you with free to enter weekly Trading Challenges where you can show off your trading skills for the opportunity to win great prizes.

At eToro we are committed to encouraging our trading community and to providing you with all the tools you need to stay connected.

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eToro is a new way to trade Forex and commodities. The eToro platform’s ground breaking design and visual interface makes the financial markets come alive in a way you have never experienced before. So whether you’re an eager newbie or a seasoned pro – join our Foreign Exchange traders community and take your online currency trading to the next level.

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How is it possible to make real money by trading in the Forex market? Two words: Margin Trading. Margin trading is trading using borrowed money.

As you recall from part one, Forex is traded in lots, usually of $100,000. So you cannot for instance, purchase a hundred, or even five hundred units of any given currency. Some Forex dealers may offer Mini-Lots, which are $10,000 – or Micro-Lots of $1,000. Fortunately, you don’t need to have $100,000 lying around in order to get started in Forex trading.

Margin Trading is used extensively in Forex trading. The broker is paid a security margin, which will typically be between a quarter of a percent and five percent. You will then have control over a much larger amount of money. To trade a lot of $100,000 you will need a margin of $1,000 for the broker. You will need more than that in your Forex account, of course in case the trade does not work out well for you.

Say that at Ten in the morning, you sell $100,000 USD and purchase Euros. At that point, you will pay $1.4725 per Euro, meaning that you will be able to buy 67,912 Euros. Your Euros then have a value of $99,967 (you lose $33 from the bid/ask spread). You then close the trade at 5PM and sell your Euros and buy US Dollars. You’ll get $1.4770 per Euro, netting you $100,306. This will mean a profit of $306 for the day.

Margin trading is a form of leverage – where a small amount of money is used to leverage, or control, a much larger amount. Using Margin Trading, you can make or lose money from tiny changes in the relative value of currencies on the Forex market.

To trade this way, you will need more than the amount of the margin in your Forex account. In the case in the above paragraphs, you would need to have had more than a thousand to begin, otherwise you would have a negative amount in your Forex account.

Say you began with twice that in your Forex account. Again, $100,000 USD is sold and Euros bought in the morning. Your used margin would be $1,033, leaving a margin of $967 in your account. Now suppose the trade goes poorly for you. At noon, the quote is EUR/USD = 1.4578/1.4583, making the 67,912 Euros you purchased earlier worth $99,002. Your usable margin would then be only $2, and your trade would be automatically c;closed to prevent your account from going into the red. As a result, you would lose $1,998.

Now suppose that you had had $3,000 in your account, and your trade could have continued. If things had kept going badly, and the quote at one PM was: EUR/USD = 1.4570/1.4575 then your Euros would be worth $98,948. Your margin would be $2,052 used, with $948 left in your account. You could then keep trading, and hope for the Euro to recover against the US Dollar. If this occurs, and by five PM the quote is: EUR/USD = 1.4770/1.4775, you could then sell your Euros and make a profit of $306 for the day.

You should try to have at least twice your margin in your account always. The best move, if possible is to never trade with more than 10% of your Forex account at any given time.

Margin Percent = 100/Leverage

Leverage = 100/Margin Percent