Playing on Forex

Game on the market FOREX - is currency speculation (ie, buy cheap - sell more expensive and it first sold better, and then buy cheaper). Unlike this speculation from the one you come across every day, translating rubles into dollars and vice versa, only in special rules, which I will try to present to you in terms of mathematics.



NOTICE. The best way to firmly grasp the rules of the new game - it's to learn the rules in the practice of the game in the Forex market or OTC market. Dealing Center Forex EuroClub provides an opportunity to learn all the details and rules for the game account Forex "demo" and "competition." If you decide, however, to familiarize themselves with this section and make your opinion about it, it shows your accuracy and serious approach to business. After reading to the end, and at the same time without losing interest for installation TradingDesk Pro 5, you will take a sort of test to the great promise as a player in the market FOREX.

Concepts and definitions of the game in Forex



First, as usual in mathematics, we introduce the basic concepts and give them a certain amount.

The market rate - the rate at which a given time you can buy (sell) one currency for another. Market rate set thousands on currency exchange transactions taking place every second all over the world. Hence the name - the "market". This course exists independently of our preferences, and you will. It is formed by millions of independent members of the foreign exchange market, and vice versa, its changes affect the views of these participants. Unpredictable changes in the market rate - drive mechanism speculation.

Arbitrage transactions (the transaction) - Purchase (sale) of the currency in order to eventually sell it (to buy). We consider only the U.S. dollar exchange transaction USD EURO (EUR), BRITISH POUND (GBP), Swiss Franc CHF) and Japanese yen (JPY), which are made at market prices (further course). It is clear that each transaction is always two sides - an open position (say buying USD for JPY) and closed positions (selling for USD JPY). In the interval between the opening and closure of positions JPY to USD exchange rate may change, which itself is the subject of interest to the transaction.

LOT - the minimum amount of currency involved in the transaction. Accordingly, the amount of the transaction is always a multiple of one lot.



NOTICE. Traditionally, the foreign exchange market set the following rule - priced in EUR / USD and GBP / USD, USD is the quote currency is, USD exchange rate indicates how many give for one and one EUR GBP. The reverse situation with USD / CHF and USD / JPY - USD on them is the main currency, ie quotation shows how much CHF and JPY offer for one USD. This point should be considered when determining the growth rates against the dollar. Increasing the value of quotes for USD / CHF and USD / JPY talk about reducing or weakening of these currencies against the USD (similar situation with ruble). An increase in the value of quotes for EUR / USD and GBP / USD reflects growth or strengthening of these currencies against the USD.



We assume that the transactions

EUR / USD 1 lot = 100 000 EUR,

GBP / USD 1 lot = 100 000 GBP,

USD / JPY 1 lot = 100,000 USD,

USD / CHF 1 lot = 100,000 USD.

Consider the example of the transaction on EUR.

Buy 1 lot of EUR at the rate of 1.0500, ie for 105 000USD Buy 100 000EUR.

Sell ​​1 lot of EUR at the rate of 1.0600, ie selling 100 000EUR get 106,000 USD. Profit from the transaction amounted to 1,000 USD

Ah, good to have 105,000 USD! And if in your pocket only 1000 USD? Analyze the deal closely. We bought 100 000 EUR, and then their own and sold, ie goal of the game in the forex was not to convert dollars into euros and profit from the changes in the dollar against the euro. If we found a partner who would agree to play with us on the result of the transaction, holding her as if in his mind! Are making on each side of 1000 USD as a deposit, which is the prize money. Such security is called the security deposit. If the result of the transaction will be beneficial for us, then we will take the prize from the deposit, show otherwise parted with their money. Considered currency fluctuations make within an average of 0.5-1%. Such a change a security deposit may be 100-200 times less than the volume of transaction and still provide a guarantee of repayment of potential losses on the transaction. The ratio of trade to security deposit called Leverage (LEVERAGE). I note that the leverage is leverage, not only multiplies your winnings, but, unfortunately, and losses. The greater the leverage, the riskier game of forex. We can now define the main tool of the market game FOREX.

Margin trading (MARGIN TRADE) - the procedure of purchase and sale of currencies on margin and security deposit to allow a deal with large amounts of currency, without handling money supply. This option trading gave a huge boost to speculation in the market FOREX, because on the one hand, to reduce overhead expenses for transferring funds and, on the other hand, attracted to gambling, and the OTC market a wide range of traders with limited capital.

PIPS (POINT) - minimal step of currency exchange rates. To "feel" what PIPS will give consideration to the value of currencies:

1 PIPS for EUR, GBP, CHF = 0.0001 (ie, reflects a change in the fourth decimal place in the value of the course)

1 PIPS to JPY = 000.01.

In our example with EURO rate change c 1.0500 to 1.0600 was 100 PIPS and provided the winning 1000 USD. Thus, one by PIPS EUR "worth" 10 USD (with the volume of the transaction, 100, 000). The word "should" I mean the mechanism of translation exchange rate gain or loss in the transaction. Here is the "cost" PIPSa for other currencies

1 GBP = PIPS to 10 USD

1 PIPS by about 9,5 USD JPY

1 CHF to PIPS about 6,5 USD

I note that the "cost" of the game PIPSov forex for JPY and CHF at every moment is different, because their values ​​are inversely proportional to the rate of those currencies.

Hopefully, it is clear that in transactions in the FOREX player only cares PIPSov number that can "bite" on the movement of a currency and how much these PIPSy stand.

How to play the FOREX?



How to Play the Forex market?

First, the player chooses a playground, through which he is going to play for Forex. To select the site, we'll talk later.

After selecting the site, the player takes on the expense of the area for a deposit, say 1000 USD, playground opens his casino account and you can start.

At any time, the player gets the market rate. It contains two prices - the price of currency purchase (ASK) and the sale price (BID) (remember how in exchange). The difference between these rates is called SPREAD, ranging typically from 2 to 10 PIPS. During the trading day (the time it establishes a platform for transactions) the player can join the game by opening a position to sell or purchase (BUY or SELL) with four major currencies. The player with the site specifies the rate of opening the position and volume in lots.

Recall that the result of the transaction depends on the leverage that sets playground. Therefore, the mechanism for opening the position is calculated so that if any currency fluctuation loss of the player was less than the security deposit. Consider the commonly used method of collateral. The site states the following: to play the forex open lot for each player makes a deposit of 500 USD. This operation divides the player's account in two. The first - a pledge, does not participate in the game on forex and returned to you at the closing position. Second - BALANCE, it always reflect the current game result. If the player loses, and the remainder is cleared, the procedure MARGIN CALL - player or add funds to your account, or playground is forcibly closed position of the player at the current rate with a loss. Thus sometimes, due to large fluctuations in the currency to repay the loss must involve and some collateral. Would like to stress again the importance of the rules by playing the forex. Currency fluctuations during the period until the open position is profitable, then the loss. If you open a position player makes sure that his balance was enough to "withstand" course change for the worse at least 50 PIPS (about 500 USD), then such a dangerous game in the Forex market will lead to losses due to forcibly closed. And it hurt to watch after hours, as the course turned and the deal could be profitable! Therefore, in order to play the forex account must have money to compensate possible losses.

So the player has chosen to play GBP, waited quotes 1.6230/1.6235 and decided to join the game in the hope of growth GBP. To do this, it asks the site the opportunity to buy one item at a price of GBP 1.6235. Ground or immediately opens the player's position, or offers a new course (usually 1 + PIPS) and gives the player time (5 to 10 seconds) to make a decision. If confirmed, the intention to open a position on the proposed rate, site automatically open position. Let us assume that the player was given the opportunity to immediately take a position on a 1 BUY lots at the rate of 1.6235. In addition to the pledge site immediately reflect on the rest of the negative difference on SPREAD (remember?), Which will be 50 USD (because if you close your open position on the same quotation, the closing rate is not 1.6235, and 1.6230).

Now the balance of the Account Team

1000 USD - 500 USD (bail)-10USD (Commission)-50USD (SPREAD) = 440USD

Obviously, the player immediately to close the deal without loss can not, because after closing the account will be 940 USD. This situation forces the player to wait for the course to SELL, as a minimum, will reach, helps cover the costs of the transaction and the opening of the game is not listed. In our case, BID must rise by 6 PIPS and achieve value 1.6236.

We consider two versions of this transaction.

1. Winning.

The player has guessed the market and 15 minutes after opening the position rate reached 1.6250/1.6255. At a price of 1.6250 player closed the deal. Calculate the result of the game in Forex.

Initial player account - 1000 USD.

Course in GBP at 15:00 MSK (Moscow time) 1.6230/1.6235

Bought 1 lot at a price of GBP 1.6235, ie 100 000 GBP paid 162,350 USD

Account balance player - 440 USD

Course in GBP at 15:15 GMT 1.6250/1.6255

1 lot sold at a price of GBP 1.6250, ie 100 000 GBP received 162,500 USD

Income from operations amounted to: 162 500 - 162 350 = 150 USD

Profit on the transaction: 150 USD - 10 USD = 140 USD.

The player's account at the end of the transaction: 1140 USD.

Note that the net profit of proportion to the number of lots in a transaction that is if the player has made a deal with the two lots GBP, the profit amounted to 280 USD (proverte!).

2. Losing.

After 15 minutes of opening the GBP dropped to a mark 1.6220/1/6225 and the player decided to leave the game.

Initial player account - 1000 USD.

Course in GBP at 15:00 MSK (Moscow time) 1.6230/1.6235

Bought 1 lot at a price of GBP 1.6235, ie 100 000 GBP paid 162,350 USD

Account balance player - 440 USD

Course in GBP at 15:15 GMT 1.6220/1.6225

1 lot sold at a price of GBP 1.6220, ie 100 000 GBP received 162,200 USD

Loss from operations amounted to 162 200 - 162 350 = - 150 USD

The loss on the transaction: -150 USD - 10 USD = 160 USD.

The player's account at the end of the transaction: 840 USD.

I wonder what would happen if the rate continued to fall, and the player holding the position. With the passage of 1.6191/1.6196 level work procedure MARGIN CALL, because The course at the current loss on the transaction amount to 162 350 - 161 910 = 440 USD and will zero balance player. With this course area forcibly close a position player and the sad result of the transaction will be as follows - at the expense of returning 500 USD and only loss will be 500 USD!



NOTICE. In the example, we made a deal with the purchase and win GBP received as a result of the currency against the dollar by 20 PIPS (c 1.6230 to 1.6250), and the loss - the weakening of 10 PIPS (from 1.6230 to 1.6220). When playing with the sale of GBP we wanted to weaken the currency to USD. That is, similar results were obtained for the following courses (opening to SELL at the rate of 1.6230):

winning - close price of 1.6215, falling 20 PIPS, winning 140 USD,

losing - closing rate 1.6245, rising 10 PIPS, losing 160 USD.

Before starting to play the Forex perform calculations yourself and make sure you those results.

The above example - are transactions on the FOREX. The attentive reader could not help but notice the difference in winning and losing on the transaction - an increase rate of 20 PIPSov yielded a profit of 140 USD, a decrease by 10 PIPSov - loss of 160 USD. This difference - self-interest grounds, the prisoner in the SPREAD and commissions original payment to the organizer for providing games on the market forex. By the way, this is not all payments which removes ground with the player. If we had not closed the deal during a single trading day, a platform would keep our account interest - payment for each item carried on the next trading day. Interest - the interest rate is analogous to a bank loan, ie it is believed that during the same trading day player shall use the means for the transaction for free, and then have to have to pay. The interest will be calculated for each day of the period during which the player holding his position open.

We assume that the interest of USD 15 for the lot, and the player in the example rate 1.6250 waited three trading days. In this case its profit is: 140USD - (3 (trading days) * 15 (interest) * 1 lot) = 95USD.

Here, in general, is all. As we can see, play forex is not very difficult. I note that the rates have not completely random. They obey certain laws and the impact of various economic factors. This is the "highlight" of the game in the market FOREX - treatment of economic news to predict the behavior of the course. So the game in the forex can be of interest not only to players - fans of roulette, the "blind" case, but first "serious" intellectuals, analysts who want to master the laws of macroeconomics and statistics and apply them in practice.

In conclusion, a few words about the choice playground. For this you should carefully consider all of the information about the site, the rules on forex, it offers and answer the following questions:

- Whether the work site the laws of your country

- What software and hardware tools platform gives you access to the FOREX in terms of convenience, simplicity, reliability, and efficiency

- The currency in which payments are made and how (the completion and write-offs for the game on forex)

- How and by whom the taxation of income from such operations

- What is the minimum deposit game

- As set SPREAD, INTEREST, leverage, the procedure MARGIN CALL

- What additional support (technical, analytical, informational, etc.) you get from the site.

What kind of answers you get will depend on the conditions for play forex, who will provide you with space, and therefore the result of this game. Site selection - a complex and long process. Examine options and do not take no deliberate decisions.