What forex? part 4

Knowing that Forex is a very volatile market, and that it is current to notice daily variations of more than pips 100, one understand(include) fast that the gains can accumulate in an extraordinary speed!! A small calculation will be more speaking:


- with 2 dollars, we thus buy a 1000-dollar lot of EUR / USD. The price passes from 1,2545 to 1,2645, we thus benefited from an increase of pips 100, that is a 10-dollar profit (10 centimes x pips 100). This profit, brought back(reported) to 2 dollars put in sets, represents a 500 % performance!! In the day!!


- another example: if we use entirely 1000 available dollars and control lever of 500, we can buy 500 1000-dollar lots. If we always base ourselves on a variation of pips 100, the profit will be 10 dollars by contract, that is all in all 5000 dollars by having investing 1000 dollars!! Always in the day!!

A last thing(matter) to be known is that for a pair of given currency, the cost price and the sale price differs:

Example: EUR / USD = purchase 1,2545 / blows = 1,2543

This difference, which we name spread, establishes(constitutes) the payment for your broker. In the practice, it means that when you buy a prize(lot) of EUR / USD, you begin with a loss equivalent to the spread, and are thus a beneficiary only from an increase equivalent to your spread.

Most of the brokers propose spreads of 2 or 3 pips on the EUR / USD. But attention, many also practise prohibitive spreads, pips 5 or 6, or post(show) spread of 1 pip by forgetting to specify that these sound variables, and more often close to 5 pips than to 1...

Now that you likened the basic vocabulary of Forex, as well as its general functioning, you really go to begin to learn how to gain(win) some money(silver) on Forex...