Who are the brokers of the Forex market?
The broker is considered a company that buys or sells currency on a specific indication of traders, opening and closing positions on the accounts of its customers. The forex broker, by convention, does not charge commissions to traders, but earns the bid-ask difference on the open and closed operations on the market.
What are the most traded currencies in the Forex market?
The most traded currencies are the U.S. dollar (USD) Yen (JPY), the euro (EUR) British Pound (GBP), the Swiss Franc (CHF) Canadian Dollar (CAD) and Australian Dollar (AUD).
What are the trading hours of the Forex market?
The Forex market is open 24 hours a day from Sunday evening to Friday evening. The contract begins each day in Sydney, moving around the world in every financial center, from Tokyo to London to New York.
How to calculate the value of a pip?
The pip, also called "Tick" is the increase / decrease a minimum of a currency.
The "value of a pip" refers to the amount of money gudagnata / lost for every pip gained / lost during a forex transaction. Similarly, the spread to be paid to the broker for each open position, shall be paid in pips.
Calculation of a "pip" with some amount of currency equal to 100,000 (the numerator in the ratio)
eur/usd | the pip is 0.0001 | 100,000 eur | x | 0.0001 | = | usd 10 |
usd/jpy | the pip is 0.01 | 100,000 usd | x | 0.001 | = | jpy 1,000 |
What is the spread "bid-ask Forex?
The difference between bid and ask is called the spread. Forex quotes are expressed with two prices, the bid price and ask price, where the former is always lower than the second. The bid is the lowest price and corresponds to the price at which traders can sell because the market is available to buy at that price. The ask is instead the highest price at which the trader can buy because the market is willing to sell at that price.
How do I calculate profits and losses?
Profits and losses are always express mail with the currency in the denominator, the P / L (profit / loss) is the difference between purchase price and sales, multiplied by the amount of the transaction.
Operational example:
I ° operation: purchase 100,000 EUR / USD at 1.2235
II operation: Sell 100,000 EUR / USD at 1.2280
therefore (1.2280 - 1.2235) x 100,000 = 450 usd profit?
What and how is it determined the margin?
The margin is the minimum deposit required to open a position. It is expressed as a percentage of the amount that will be negotiated, and depends on the leverage applied to the account. The calculation of margin required to open and maintain a position is determined on the amount placed on the first report of the currency exchange rate.
What is leverage?
Forex, acting at the margin, it is possible to trade on leverage. In simpler words, this term describes a situation in which a small amount of money controls a much larger amount. The person buy or sell one currency against another currency in multiples of funds it has available.
What is differential rates?
Each currency has a price of funding variable defined interest rate. When you open a position change, you are buying one currency and sell another simultaneously. The spot forex market, which assesses two days, interest is cashing currency bought and sold are paid on that if you close the position within the first 24 hours. The debit or credit of the differential rates is through a mechanism called rollovers.