Ways to Make Profit in the Forex Market

Beginner Questions
1

I will try to explain how to make profit in the Forex market simply in Examples, keep subscribed to this thread.

Example :

GBP/USD Let’s say your deposit is $3,000 and your leverage is set at 1:500. Through this leverage, you are buying power on the market is actually $1,500,000. From your analysis, you are expecting the US$ to rise against the major currencies. You decide to SELL 0.10 lots ($1 per pip) of the GBP/USD pair at the market price of 1.8000 and since you only want to risk 10% of your account, you set your stop loss order at 1.8300 (300 pips or $300 risk) 12 days later the GBP/USD quote is 1.7540 and you decide to close your SELL position. Your profit in pips is (1.8000 - 1.7450) 550 pips. Since you chose to trade 0.1 lots volume and the value per pip is $1. You made a profit of $550 on this trade.

I hope that helped … if u have any question dont hesitate to reply and ask your question and I will try to help as possible as I can.

More Examples will be added.

3

I think it is safe to put it that way, cause we all know GBP npw is lower that the previous years and USD is sometimes rising. but what is you didn’t expect USD suddenly drops, is there a safety net?

4

While there are many ways to trade, I don’t think I would suggest risking 10% of your account balance on one single trade. GBP/USD can move 300 pips in a day, so it could be very possible that your stop would be hit.

As an example, what you stated is an ideal trade playout… buy or sell, make profit and close trade…

Risk vs reward is what its all about.

Rob, your safety net is your stop loss of 300pips…

5

This usually leads to more confusion and is not really necessary in your example.

6

Not to mention that for US brokers that is now going to be shrunk to 50.

7

Adam, are you going to explain a system, or are you going to explain the mechanics of trading?

I only ask because if the former, you should probably start by going down that road first. If the latter then I would make it clear upfront that is what you intend to do.

Also I wouldn’t cover what the pipschool has covered unless you are going to expand upon it. In the interest of encouraging learning which is what you appear to want to do, I would also suggest you leave “homework” or “class debate” type questions open and after a set amount of time address them, and all concerns that were brought up during the discussion. This would allow for more people to learn, now and later, with a clear defined starting position.

Whichever direction, your off to a good start. Its clear your going to take your time and present good material, I just think a better idea of what material you plan to cover up front would be a good idea. Maybe even give an outline of some kind.

8

I’d use a broker which allows hedging to prevent losing my pips, so if it drops I’d open an opposite trade sell/buy to buy/sell .

9

If I’m a pro, and I’m sure of the signal movement as I’m expecting, then why not ??

10

It is necessary, to calculate how much profit you made !

11

Would you elaborate please ?? I’m using a US Broker.

12

Hi Simy,
Nice idea leaving a home work, I’ll put that on my mind.
Thanks for your suggestions and subscribing to the thread.
Cheers.

13

[B]Example:[/B]

The investor believes the Canadian dollar will strengthen against the US dollar. It is a long term view, so he takes a small position to allow for wider swings in the rate:

He asks for a quote on USD1,000,000 against the Canadian dollar and Global Trade Station quotes 1.5390-95 and the investors sells USD at 1.5390. Selling USD is the equivalent of buying the Canadian dollar.

Day 1: Sell USD 1,000,000 vs CAD 1.5390. He swaps the position out for two months receiving a forward rate of CAD1.5357 = Buy CAD1,535,700 for Day 61 due to the interest rate differential.

After a month, the desired move has occurred. The investor buys back the US dollars at 1.4880. He has to swap the position forward for a month to match the original sale. The forward rate is agreed at 1.4865.

Day 31: Buy USD1,000,000 vs CAD 1.4865 = Sell CAD1,486,500 for Day 61.

Day 61: The two trades are settled and the trades go off the books. The profit secured on Day 31 can be used for margin purposes before Day 61.

The USD account receives a credit and debit of USD1,000,000 and shows no change on the account. The CAD account is credited CAD 1,535,700 and debited CAD 1,486,500 for a profit of CAD49,200 = approx. USD33,100 = profit of 33.1% on the original deposit of USD100,000.

14

Why not just close the trade and then short it?

No it’s not. You didn’t even use the 1:500 leverage in your own calculation.

15

As I said, risk vs reward… its different for everyone.

I’d use a broker which allows hedging to prevent losing my pips, so if it drops I’d open an opposite trade sell/buy to buy/sell .

Well as i also said, there are many ways to trade, however hedging is not a good idea or practice to get into. But what ever works for you…

16

Yeah, you already established its was .1 lot trade, so the leverage is irrelevant and doesn’t factor into the profit calculation.

Cheers

17

does a pro can really do that or sometimes they will fail because of their expectation?

18

Failing or losing is part of trading… a PRO will accept the loss and move on without a worry.

Rob, just remember there are few real Pro traders here, so take most advice with a grain of salt

19

i see, thanks for your advice.

in cooking, a small amount of salt will make your recipe tastes good, too much will make it salty, :smiley:

20

Everyone has his own strategy in trading, and he uses the way which will make profits for him, and by the way I don’t hedge unless the indicator goes opposite to what I expected, just to prevent losing my money !!

21

Yes, trader needs to LEARN accepting loses, because you’ll NEVER always win, so losing is a MUST in Forex.

Beside that Yes there are a few PRO’s here, so use your mind before taking an advice from someone who think he’s a pro and ask once, twice and hundred times, don’t invest your money in VAIN rob.