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Most users ever online was 74 on Wed Nov 23, 2016 10:47 pm


    Currency calculation

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    Admin
    Admin

    Posts : 4
    Join date : 2009-12-17

    Currency calculation

    Post  Admin on Sun Dec 20, 2009 3:10 pm

    Currency Calculation:

    Due to the high leverage in Forex trading, currency traders are often confused

    how to calculate their profits/losses. Even though our trading platform
    automatically calculates all the necessary equations by converting everything
    into U.S dollars, it is advisable to understand those calculations in order to build
    successful trading strategies.

    To demonstrate these calculations, we will be using the most commonly traded
    currency- EUR/USD.
    Buying a deal size of 10,000 on the EUR/USD means that you are buying
    10,000 EUR while selling the equivalent in USD.

    Explanation: A trader assuming that the Euro is going to strengthen against the
    Dollar will buy Euros and Sell Dollars.
    A click on the “BUY” button will allow you to buy € 10,000 while selling
    $14,363
    € 10,000*1.4363(ask price) = $14,363
    ! Remember that one of the benefits of this markets means that your money is
    leveraged (Default = x200), allowing you to open trades a lot larger than your
    initial deposit. This allows you to maximize your potential profits while taking
    advantage of the moving trends.
    Once a position is opened, the value of each PIP varies depending on your
    position size.
    To demonstrate the calculations we will continue to use the example on the
    previous page.
    € 10,000*1.4363(ask price) = $14,363
    € 10,000*1.4364(ask price) = $14,364
    ------------
    $00,001 = Each pip is worth $1
    € 50,000*1.4363(ask price) = $71,815
    € 50,000*1.4364(ask price) = $71,820
    ------------
    $00,005 = Each pip is worth $5
    • This calculation will always give you the value of each PIP in the
    secondary currency.
    Simple formulas
    1) (Deal size)/10,000 = value of each PIP in the secondary currency.
    (This formula is only for currencies with 4 digits
    after the decimal point)
    Example: EUR/USD € 10,000/10,000= $1 per PIP
    2) (Deal size)/ 100 = value of each PIP in the secondary currency.
    (This formula is only for currencies with 2 digits
    after the decimal point)
    Example USD/JPY $10,000/100= ¥100 per PIP
    • Calculations can be adjusted to the desired currency accordingly.
    PIP values that are not in USD can be easily converted to the currency
    requested by using the relevant pair.
    Example: Step 1) USD JPY Bid price =114.23 Ask price =114.29
    Step 2) USD/JPY $10,000/100= ¥100
    Step 3) PIP value/ Bid price = value of PIP in desired rate
    ¥100 / 114.23 = $0.8754
    It is always advisable to calculate your potential profits and losses before taking
    the trade.

    David Young

    Posts : 72
    Join date : 2015-10-14

    Re: Currency calculation

    Post  David Young on Mon Nov 09, 2015 6:09 pm

    Yeah this is something pretty tricky to understand for novice traders, so reading all this is very helpful for anyone. I have learned this all very well with Nova FX broker since they have really high quality educational corner that help us a lot given it’s pretty straight forward yet seriously effective and most importantly it is absolutely free and available for all even ones who are not trading with this broker which in my view just shows their character.

    Master Mohan

    Posts : 32
    Join date : 2016-06-06

    Re: Currency calculation

    Post  Master Mohan on Tue Jun 28, 2016 11:23 am

    These things are absolutely critical to our chances, if we wish to be successful then we got to do all these things wisely and only then we could be able to make good profits with ease. I don’t have much to worry over with OctaFX broker since they have got amazing educational setup which really helps me a lot with working and also have several demo contest to go with, so all that really helps fair bit and allows me to work nicely.

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