Possibilities of making a profit in forex
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  1. #1

    Default Possibilities of making a profit in forex

    I am new to forex but i have come across binaryoptions and i kinda know how binaryoptions are and how they are traded on popular platforms like iqoption.

    However i need to know this about forex.

    The ways on how money is made or lost in forex is yet to sink in.The first way is to buy low and sell high, that much i know but the details are not clear. I have gone through the forex jargon and i have read quite a lot in my estimation.

    I watched a video that brought the idea of time in forex trading. If i buy at lets say 7:00am and speculate that the value of what i had bought will have risen at 7:05am ,how will my profit be calculated and is stop trade available in this case and how leverage come in in this case?.

  2. #2
    Join Date
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    Quote Originally Posted by ohbeardedonefullofwisdom View Post
    If i buy at lets say 7:00am and speculate that the value of what i had bought will have risen at 7:05am ,how will my profit be calculated and is stop trade available in this case and how leverage come in in this case?.

    In the case of a trade in the spot forex market (in contrast to the binary options you're used to), your profit on a long trade will be the difference between the bid price at 7.05 for which you sell and the ask price you paid when you bought at 7.00. In the case of a short trade (you were hoping the price would go down and it did), your profit will be the difference between the bid price at which you sold to open your position at 7.00 and the ask price at 7.05 when you "buy to close".

    Either way, the spread will work against you, in other words, so you'll need to cover that, before making profit - and it's even possible that the spread may change a little between 7.00 and 7.05 when you're trading. (But it's still generally a whole lot safer and better, overall, than a binary option with which the deck is typically even further stacked against you by the built-in "house edge" you have to overcome too.)

    A stop-loss is always available, when you open a position, and you can choose where it goes (except that some brokers will require it to have a minimum value).

    And regarding leverage, this is a huge subject which you need to read about. I think (and hope) that a slow, careful read through ths first page of this thread will explain some of it to you: http://forums.babypips.com/risk-mana...rage-risk.html, and this one might help, too: http://forums.babypips.com/newbie-is...izes-help.html.

    (Edited to change a word or two for clarity, i.e. to give you a chance of knowing what I was on about ... )
    Last edited by lexys; 01-05-2017 at 07:08 PM.

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