Foreign Training / Trading Example
Currencies are always traded against each other. The most liquid currency pairs are called the majors:
EUR/USD » referred to as EUR
USD/JPY » referred to as JPY
USD/CHF » referred to as CHF
GBP/USD » referred to as GBP
When we deal in the above currency pairs, we are always dealing in the primary currency:
- Buy EUR at 1.2500 (you are buying the EUR against the USD and hoping that the price goes upwards)
- Sell GBP at 1.8500 (you are selling the GBP against the USD and hoping that the price goes downwards)
Orion Brokers have standardized lot sizes as follows:
| Currency Pair |
Contract size |
Value of 1 pip |
| EUR/USD |
€ 100,000 |
$ 10.00 |
| USD/CHF |
$ 100,000 |
$ 8.10 (about) |
| USD/JPY |
$ 100,000 |
$ 8.65 (about) |
| GBP/USD |
£ 100,000 |
$ 10.00 |
For each lot you want to open (trade), you must have a minimum of $1,000 in your account (1% margin).
Therefore if you start your account with $10,000, you can buy or sell up to 10 lots (though not recommended). If you profit $2,000 because you made the right decision, then on the next trade you can open 12 lots. If however you lose $2,000, then on the next trade you can only open 8 lots.
Margin a call:
There is no margin call on the account. However, all positions in the account will be closed when the margin level is at 5% (Equity / Margin ratio).
Example:
Equity $10,000 ÷ Margin required $5,000 = 200%
Equity $5,000 ÷ Margin required $5,000 = 100%
Equity $1,000 ÷ Margin required $5,000 = 20%
Equity $250 ÷ Margin required $5,000 = 5% (all positions will be closed)
Profit and loss calculation:
Buy 3 EUR at 1.2500 / Sell 3 EUR at 1.2550
(3 x 100,000 x 1.2550) – (3 x 100,000 x 1.2500) = $1,500 profit
Buy 4 CHF at 1.2300 / Sell 4 CHF at 1.2350
((4 x 100,000 x 1.2350) – (4 x 100,000 x 1.2300))/1.2350 = $1,619.43
Above examples are all winners. An example of a losing position is as follows:
Sell 3 GBP at 1.8500 / Buy 3 GBP at 1.8550
(3 x 100,000 x 1.8500) – (3 x 100,000 x 1.8550) = $1,500.00 loss
NOTE: The above calculations do not include commissions.
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