We dedicate this part to one of the most basic issues 'important to know before approaching any operability' of Forex trading: margin and leverage.
How to calculate the value of a pip? (1 pip = 0.0001)
=> digit investita/10.000 ES. € 2,000 / 10,000 = 0.2 value of a pip
€ 5,000 / 10,000 = 0.5 value of a pip
€ 10,000 / 10,000 = 1 value of a pip
- consiglio.Un A good broker considers the his commission in proportion to the value invested and not so fixed, which means' to do 3 or 4 pip pip. This factor and 'from hold tight in consideration for all those small investors who enter the Forex market with micro-lots and mini-batch.
- In fact, a micro-lot is equivalent to a value of 1,000, so if we buy a lot we have entered the market with an equivalent $ 1,000 if they buy 10 we entered the market with a value of $ 10,000 (ie to buy the EUR / USD). There are small numbers for whom it has a strong incisiveness' the fixed fee.
Now, we must consider the
margin of protection.
Open an account with $ 2,000 deposit, we work with micro-lots and our brokers charge a fee in proportion to the value invested. I want to know in advance how many lots can I get wanting to withstand volatility 'daily EUR / USD of about 200 pips (when the market not 'very volatile).
we take the amount of deposited
$ 2000 (in € if they were we would have to change them at the current rate in $) and divide by
200
pips then we have: $ 2,000 / 200pips = 10, which means I can invest $ 10 for each pips the value of a lot that we purchased equals 1,000, and our operation base ': investita/10.000 digit = value 1pip
I know how can I put in $ per pip and I want to know how many lots are then take the value that I can invest $ 10 per pip calculated above and multiply by 10,000 $ 10 * 10,000 = 100,000 100.000/1.000 = 100 total lots purchased with an account of $ 2,000, the value of 1lotto by 1000, with volatility 'daily 200pips. Let's assume we want to stay longer 'quiet. We want to consider 1.000pips
volatility ', let's see what happens:
$ 2,000 / 1,000 = $ 2 per pip
$ 2 * 10,000 = 20,000
20.000/1.000 = 20 total lots bought with a volatility 'of 1.000pips. How 'easy to understand, and the number is' significantly lowered.
Consider instead, the value of 1lotto = 100,000 and
500pips volatility ' $ 2,000 / 500 = $ 4 per pip $ 4 * 10 000 = 40,000 = 0.4
40.000/100.000 lots purchased.
This calculation and 'must do before you enter the Forex market because' first lets you know the value of risk to which you go 'meeting, with significant reduction of stress and anxiety control and calculated the risk of leakage.
.
Today, the Forex market to operate with small amounts of the Broker have entered the so-called leverage. Starting from a min. to a maximum of 1:20 to 1:500. I have my account of $ 2,000, value of 1000 batch I want to know my leverage on the capital invested. So 'you can buy with margin 100lotti 200pips. then 100 * 1000 = 100,000 amount invested
100.000/2.000 = $ 50, and 'leverage my investment. My any gains or losses will go up or down '50 times for each pip invested a total of $ 100,000 bought.
Let's see what happens if you buy more 'lots, ie,' 200.
200 * 1000 = 200,000
200.000/2.000 amount invested = $ 100, leverage and 'doubled since' I've doubled the risk. In fact, if we look at the value we 1pip:
200.000/10.000
= $ 20 and if we calculate the pips of risk we are taking will: $ 2,000 / $ 20 = 100pips risk, and no more '200, greatly increasing the risk of volatility'.
Finally, these accounts and 'must do this because' it possible to calculate that level to which we are willing to lose in a defined strategy of entry. All this also allows the proper management of money management, a subject must not be empty the account in a few clicks. Begin to lose and knowing 'the natural cycle of an investment in Forex, but it' s not only need to give yourself chances 'loss but above all odds' gain. To achieve this we must have good management of its money management with the proper use of the leverage ratio / margin as described above.
more information visit
hereforex.blogspot.com
a great blog to learn strategies and respect for the Forex market
learntotradethemarket.com
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