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Forex Trading
Examples

NSFX trading examples

Understanding the calculations involved in placing Forex trades is an important starting point and should be understood clearly, no matter the size or direction of the position. With that in mind let’s review a few examples:

  • Standard Lot
    (units 100,000) 1.0 Lot
    Pip Value=$10
    Mini Lot
    (units 10,000) 0.1 Lots
    Pip Value=$1
    Micro Lot
    (units 1,000) 0.01
    Pip Value=$.10

    Example Trade using Currency Pair: EUR/USD

    A Buy (Long) EURO/USD “Mini-Lot” 0.5 Lots (50,000 unit) position, with 200:1 leverage, entered at a market price of $1.3000. The USD value of the position will be: 50,000 units X $1.3000 = $65000. With a margin requirement of 0.5% (1:200 leverage), the result will be $325 required to open the position.

    Please Note: Margin Requirements will be calculated by the currency base (USD,EURO,GBP) chosen for the account by the client.

    Pip Formula= 100,000(Lot Size) X .0001 (tick size) = $10.00

    50,000 X .0001=$5

    Taking a Trade in Play and Closing it out

    Assuming you’ve now opened the position in the market. The market moved in your favor 70 pips to a market rate of 1.3070.
    At this point you’ve earned $335,
    after covering your spread costs (5 X 70 – 15=335).
    Basically on a half a lot EURO/USD position leveraged 200 times. The Margin requirement and spread cost to get in $325 and $15 (spread cost)= $340. At $5 a pip, after a 70 pip move your position earned $350 in the market. Upon closing out you should have $690 USD (assuming no rollover/swap fees applied). Close out the position pay the spread cost $15, and enjoy.

    Direct Rate Currency Pair Trade Examples: EURO/USD

    Direct Rate Pairs involve any pair in which the USD is the quote (base/quote).
    The EURO/USD is considered a direct pair EURO-base, USD-quote.

    Important Details:

    • Lot Size: 0.5 (50,000 units)
    • Leverage: 200:1
    • Market Value: $ 65,000
    • Margin Requirement: 0.5%
    • Market Rate: $1.3000
    • Investment: $325
    • Spread Cost: $15
      (Spread Cost of 3 pips)
    • Pip Value: $5.00/per pip
    • ROI: $350 or 102.94%
  • Standard Lot
    (units 100,000) 1.0 Lot
    Pip Value=$10
    Mini Lot
    (units 10,000) 0.1 Lots
    Pip Value=$1
    Micro Lot
    (units 1,000) 0.01
    Pip Value=$.10

    Example Trade using Currency Pair: AUD/USD

    A Sell(short) AUD/USD Standard 1.0 Lot(100,000 unit) position, with 100:1 leverage, entered at a market price of $1.0350. The USD value of the position will be 100,000 units X $1.0350 = $103,500. With a margin requirement of 1% (1:100 leverage), the result will be $1,350 required to open the position.

    Please Note: Margin Requirements will be calculated by the currency base (USD,EURO,GBP) chosen for the account by the client

    Pip Formula= 100,000(Lot Size) X .0001 (tick size) = $10.00

    100,000 X .0001= $10.00

    Taking a Trade in Play and Closing it out

    Assuming you’ve now opened the position in the market. The market moved in your favor 50 pips to a market rate of 1.0280. At this point you’ve earned $460, after covering your spread costs (10 X 50 – 40=460).
    Basically on a 1 Lot AUD/USD position leveraged 100 times. The Margin requirement and spread cost to get in $1,350 and $40(spread cost)= $1,390. At $10 a pip, after a 50 pip move your position earned $500 in the market. Upon closing out you should have $1850 USD (assuming no rollover/swap fees applied). Close out the the position, pay the spread cost of $40, and enjoy.

    Direct Rate Currency Pair Examples: AUD/USD

    Direct Rate Pairs involve any pair in which the USD is the quote (base/quote).
    The AUD/USD is considered a direct pair AUD-base, USD-quote.

    Important Details:

    • Lot Size: Standard 1 Lot (100,000 units)
    • Leverage: 100:1
    • Market Value: $ 103,500
    • Margin Requirement: 1%
    • Market Rate: $1.0350
    • Investment: $1.350
    • Spread Cost: $40
      (Spread Cost of 4 pips)
    • Pip Value: $10.00
    • ROI: $500 or 33.1%
  • Standard Lot
    (units 100,000) 1.0 Lot
    Pip Value=$10
    Mini Lot
    (units 10,000) 0.1 Lots
    Pip Value=$1
    Micro Lot
    (units 1,000) 0.01
    Pip Value=$.10

    Example Trade using Currency Pair: GBP/JPY

    A Buy (Long) GBP/JPY 2 Lot (200,000 unit) position, with 200:1 leverage, entered at a market rate of ¥131.80. The GBP Value of the position will be 200,000 units X £1.6039 = £320,780 (Note: To convert to USD, simply convert to GBP/USD market rate). With a margin requirement of 0.5%(1:200 leverage),the result will be £1,000 in Pounds Sterling/ or converted to USD (at a GBP/USD market rate of 1.6039) $1,603.90 required to open the position.

    Please Note: Margin requirements will be calculated by the currency base (USD, EURO,GBP) chosen for the account by the client).

    Pip Formula= Lot size X Tick Size .0001 (# of 000s the pair trades in) X Base quote GBP/USD / current rate of GBP/JPY

    200,000 X .01 (JPY tick size) X $1.6039 (GBP/USD Base Quote) / ¥131.80= $24.34 USD/£15.17

    Taking a Trade in Play and Closing it out

    Assuming you’ve now opened the position in the market. The market moved in your favor 60 pips to a market rate of 132.40. At this point you’ve earned $1314.36, after covering your spread costs ($24.34 X 60 – $146.04=1314.36).

    Basically on a 2 Lot GBP/JPY position leveraged 200 times. The Margin requirement and spread cost to get in $1,603.90 and $146.04(spread cost)= $1,749.95. At $24.34 a pip, after a 60 pip move your position earned $1460.40 in the market. Upon closing out you should have $3064.31 USD (assuming no rollover/swap fees applied). Close out the the position, pay the spread cost of $146.04, and enjoy.

    ALTERNATIVE CURRENCY PAIR TRADE EXAMPLES: GBP/JPY

    Cross Rate Pairs involve any pair that doesn’t consist of a US Dollar base or quote (base/quote). While the US Dollar isn’t there it is important and is used when making calculations.
    The GBP/JPY is considered a cross GBP-base, JPY-quote.

    Important Details:

    • Lot Size: Standard 2 Lots (200,000 units)
    • Leverage: 200:1
    • Market Value: £320,780 or $514,499.04
    • Margin Requirement: 0.5%
    • Market Rate: ¥131.80
    • Investment: £1,000 / $1,603.90
    • Spread Cost: £91.0525/$146.04 (Spread Cost 6 of pips)
    • Pip Value: £15.17/$24.34
    • ROI: £910.53 / $1,460.40 or 83.43%
  • Standard Lot
    (units 100,000) 1.0 Lot
    Pip Value=$10
    Mini Lot
    (units 10,000) 0.1 Lots
    Pip Value=$1
    Micro Lot
    (units 1,000) 0.01
    Pip Value=$.10

    Example Trade using Currency Pair: EUR/GBP

    A Sell (Short) EUR/GBP “Mini-Lot” 0.5 Lot (50,000 unit) position, with 100:1 leverage, entered at a market rate of £0.8605. The EURO Value of the position will be 50,000 units X €1= €50,000(Note: To convert to USD, simply convert to EURO/USD market rate). With a margin requirement of 1%(1:100 leverage),the result will be €500 /or converted to USD Value (at a EURO/USD market rate of 1.2920) $646 required to open the position.

    Please Note: Margin requirements will be calculated by the currency base (USD, EURO,GBP) chosen for the account by the client).

    Pip Formula= Lot size X Tick Size .0001 (# of 000s the pair trades in) X Base quote EURO/USD / current rate of EUR/GBP

    50,000 X .0001 (EURO tick size) X 1.2920 (EURO/USD Base Quote) / £0.8065= $7.51 USD/ €5.81

    Taking a Trade in Play and Closing it out

    Assuming you’ve now opened the position in the market. The market moved in your favor 80 pips to a market rate of £0.8525. At this point you’ve earned $519.15, after covering your spread costs ($7.51 X 80 – $30.04=$570.76).

    Basically on a 0.5 “Mini Lot” EUR/GBP position leveraged 100 times. The Margin requirement and spread cost to get in is $646 and $30.04(spread cost)= $676.04. At $7.51 a pip, after a 80 pip move your position earned $600.80 in the market. Upon closing out you should have $1246.80 USD (assuming no rollover/swap fees applied). Close out the the position, pay the spread cost of $30.04, and enjoy.

    ALTERNATIVE CURRENCY PAIR TRADE EXAMPLES: EUR/GBP

    Cross Rate Pairs involve any currency pair that doesn’t consist of a US Dollar base or quote (base/quote). While the US Dollar isn’t there it is important and is used when making calculations.
    The EUR/GBP is considered a cross EURO-base, GBP-quote.

    Important Details:

    • Lot Size: Mini Lot 0.5 Lots (50,000 units)
    • Leverage: 100:1
    • Market Value: € 50,000 or $64,600
    • Margin Requirement: 1%
    • Market Rate: £0.8065
    • Investment: €500 / $646
    • Spread Cost: €23.24/$30.04 (Spread Cost 4 of pips)
    • Pip Value: €5.81 / $7.51
    • ROI: €465.01 / $600.80 or 88.87%
  • Standard Lot
    (units 100,000) 1.0 Lot
    Pip Value=$10
    Mini Lot
    (units 10,000) 0.1 Lots
    Pip Value=$1
    Micro Lot
    (units 1,000) 0.01
    Pip Value=$.10

    Example Trade using Currency Pair: USD/CAD

    A Buy (Long) USD/CAD “Standard Lot” 1.0 Lot (100,000 unit) position, with 200:1 leverage, entered at a market price of $0.9880. The USD value of the position will be: 100,000 units X $0.9880 = $98,800. With a margin requirement of 0.5% (1:200 leverage), the result will be $494 required to open the position.

    Please Note: Margin Requirements will be calculated by the currency base (USD,EURO,GBP) chosen for the account by the client.

    Pip Formula=Lot Size X Tick Size .0001 (# of 000s the pair trades in)/ Current Rate

    100,000 X .0001 (CAD tick size) / 0.9880=$10.12

    Taking a Trade in Play and Closing it out

    Assuming you’ve now opened the position in the market. The market moved in your favor 40 pips to a market rate of 0.9920. At this point you’ve earned $374.44, after covering your spread costs (10.12 X 40 – 30.36=$374.44).

    Basically on a Standard Lot USD/CAD position leveraged 200 times. The Margin requirement and spread cost to get in $494 and $30.36(spread cost)= $524.36. At $10.12 a pip, after a 40 pip move your position earned $404.48 in the market. Upon closing out you should have $898.48 USD (assuming no rollover/swap fees applied). Close out the position pay the spread cost $30.36, and enjoy.

    Indirect Rate Currency Pair Trade Example: USD/CAD

    Please Note: For indirect Rate pairs the formula changes slightly. In order to calculate in USD terms, the Current Rate must be factored in terms the quote. Meaning in this case the number of Canadian Dollars needed to buy $1.00 USD. In this example .9880 CAD=$1.00 USD

    Indirect Rate Pairs involve any in which the USD is the base (base/quote).
    The USD/CAD is considered an indirect pair USD-base, CAD-quote.

    Important Details:

    • Lot Size: 1.0 (100,000 units)
    • Leverage: 200:1
    • Market Value: $ 98,800
    • Margin Requirement: 0.5%
    • Market Rate: $0.9880
    • Investment: $494
    • Spread Cost: $30.36
      (Spread Cost of 3 pips)
    • Pip Value: $10.12/per pip
    • ROI: $404.48 or 77.14%

* The above illustrations are mere fictitious examples and are not to be construed in any way to constitute investment advice.

** The performance figures quoted are only estimates and may not be reliable indicator of future performance of this investment.

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