Forex: How to Trade

Forex trading is a business where profits and risks run together. If you are interested in forex trading you can make use of the Forex profit accelerator course designed by Bill Poulos for teaching people how to make instant profits from forex business. Bill Poulos has been trading successfully in forex since years and an expert teacher. You can follow the guidelines provided by him and expect to see your profits run.

The question that most beginners ask is how to trade in forex. Here is a characteristic trade situation.

We assume that it is a standard Lot that you will be trading in. A standard Lot comprises of 100,000 units of currency.

Now let us suppose that the current bid/ask quote for EUR/USD is 1.3802/05 and you want to take a long position in it. Going long means you are buying because you think the Euro will gain against the dollar.

When you place this order then you are actually buying 100,000 Euros for $ 138,050 at 1.38050 to the dollar. The margin that you will have to deposit for this trade is $ 1,381, which is 100:1.

If the Euro actually gains against the dollar and is now trading at 1.3865/68 and you decide to book your profit, you will have to sell one standard Lot. The profit you take home is 60 pips.

When you sell this pair you have sold 100,000 Euros for $ 138650 at 1.3865 to the dollar. Considering that you purchased this Lot for $ 138,050 you make a cash profit of $ 600. That is how profits run instantly in forex markets.

There is a possibility of the Euro falling instead of gaining. Suppose the Euro went down to 1.3775/78 and you want to exit from the trade, you will be booking a loss of $ 300 (being the difference between you purchase for 138050 and sale for 137750) as the Euro fell by 30 pips.

You have invested $ 1381 in the trade and you need to protect your equity by employing a healthy risk management rules. This is one of the important aspects of trading to ensure that your account equity does not fall below margin levels. If it does then your trade will be liquidated automatically resulting in a considerable loss.