Frequently Ask Questions
Standard unit size of a transaction. 1 lot is 100,000 currency units (USD,EUR,CAD etc.)
To go long means buy, since it is a Bullish prediction
To go short means to well, since it is a bearish prediction
Margin is the required amount in the base currency of the trading account needed to open or maintain a position. When trading forex, the Required/Used Margin for a specific position=Number of Lots * Contract size / Leverage. Here the result is originally calculated in the first currency of the traded pair, and then converted into the base currency of your trading account, which will be numerically displayed on your MT4, or any other trading platform. The margin requirement for gold and silver is calculated like this: Lots * Contract Size * Market Price / Leverage. The result will be in USD, which will be converted into the base currency of your trading account (in case it is other than USD). For CFDs, the required margin is Lots * Contract Size * Opening Price * Margin Percentage. The result will be in USD, which will be converted into the base currency of your trading account (in case it is other than USD). More details can be seen here. Margin level is calculated with the formula Equity/Margin * 100%. Free margin is your equity minus margin. It means the available funds that you use for opening new positions, or for maintaining existing positions.
Leverage is the multiplication of your balance. This allows you to open bigger trading positions since the margin required will be lowered according to the leverage you have chosen. Even though with leverage you can make a bigger profit, there is also a risk of having a bigger loss because the positions you open will be of higher volume (lot size).Example: Your trading capital is 10,000EUR The leverage chosen is 100:1 For a FIX trading account this means 100*10,000=1,000,000EUR On EURUSD long position opening at 13,055, position closing at 13,155 The difference is 0.0100 pips thus 1,000,000*0.0100=10,000USD this is the profit you made.
Stop loss is an order for closing a previously opened position at a price less profitable for the client than the price at the time of placing the stop loss. Stop loss is a limit point that you set to your order. Once this limit point is reached, your order will be closed. Please note that you need to leave certain distances from the current market price when you set up stop/limit orders Using stop loss is useful if you want to minimize your losses when the market goes against you. Stop loss points are always set below the current ASK price on BUY, or above the current BID price on SELL
Take profit is an order to close a previously opened position at a price more profitable for the client than the price at the time of placing the take profit. When the take profit is reached, the order will be closed. Please note that you need to leave certain distances from the current market price when you set up stop/limit orders.