Hi there everyone. I’m a newbie here and in forex trading as well So I did read most of the school tutorial on this site, which by the way is pretty good… So I downloaded the mt4 platform and opened a demo account on fxcm ltd. Since I live in EU with EUR currency I thouht is it was more appropriate to open an EUR account, so now I have a 3.000 EUR account to learn to play the game However a few puzzles are missing in my knowledge base:
If I have an EUR account, and notice that there will be an uptrade of EUR/USD, i.e. the EUR will grow, how can I buy the EUR/USD currency pair (buy EUR with USD) if I already have euros, and what would be the conversion factor? Therefore I think that I must wait until I notice a down trend of EUR/USD and then place a sell position and close it when I think the trend will go up again. Is this the right way to do, or am I wrong here?
When I tried to place such an order I got the message “Invalid SL or TP”, what is this supposed to mean. Current price was 1.31820/1.31837, so I placed a sale order and set the take profit to 1.31775 and stop loss to 1.31835. what did I do wrong here?
Much thanks in advance for your help guys.
[B]Question 1[/B]
When you are trading currency pairs, something to keep in mind is that you are not physically exchanging one currency for another. For example, your demo account is denominated in Euros. The money in that account will always be denominated in Euros. You will never physically exchange those Euros for another currency, no matter what currency pair you trade.
When you place a currency trade, you are speculating on the direction of the exchange rate. If you think the British Pound will rise in value relative to the Japanese Yen, then you can buy the GBP/JPY currency pair. You will then make money if the rate goes up, but lose if the rate goes down. If you think the British Pound will fall in value relative to the Japanese Yen, then you can sell GBP/JPY. You will then make money if the rate goes down, but lose if it goes up. It doesn’t matter that your account is denominated in Euros.
It might help if you follow along with this example by looking at the Simple Dealing Rates tab on your FXCM Trading Station demo account. This is a screenshot of one of our Euro-denominated demo accounts. That means Pip Cost and MMR (Minimum Margin Requirement) are shown in Euros.
Notice that the Pip Cost for GBP/JPY is 0.08. That means if you have a GBP/JPY trade open in your account, then every pip you make or lose on the trade will be worth 0.08 Euros on a 1k microlot trade, which is the minimum trade size. Notice also that the MMR for GBP/JPY is 7.00. That means you would have to set aside 7.00 Euros as Used Margin to be able to open that 1k GBP/JPY trade. Below is a screenshot of the Open Positions tab showing a 5k GBP/JPY long trade (a trade to buy the currency pair).
[B]Gross P/L = P/L * Pip Cost * Amount[/B]
The trade is currently floating a profit of 0.5 pips. Since the Pip Cost is 0.08 Euros per 1k, and the Amount is 5k, the Gross P/L is 0.20 Euros (0.5 * 0.08 * 5)
Your original question was about EUR/USD. If you think it’s going up, you can buy 1k EUR/USD by setting aside 5.00 Euros as Used Margin, and each time your trade makes or loses a pip, you equity will go up or down by 0.08 Euros.
[B]Question 2[/B]
Regarding the “Invalid SL or TP” error that you got. If the price was 1.31820/1.31837, then that means the ask price is 1.31837. Your stop loss has to be above the current ask price in the market when you have a short trade (a trade to sell the currency pair).
If you have any further questions about your demo trading, feel free to ask me in the Broker Aid Station.
For question 1, the pip value for EURUSD is USD10. To facilitate the calculation of the lot size based on your EUR account, you can first convert the amount of risk to USD.
As an example, if you intend to risk EUR100 per trade, that would mean
USD132 based on current rate of about 1.3200. Then you can calculate the lotsize = risk amount / pips x pips value.
You can still trade Long or Short for EURUSD even though your account is denominated in EUR. You are trading the price action and not actually converting your currency.
For question 2, your stop loss 1.31835 is below the entry price of 1.31837. For a short position, your SL must be above the entry price.
For a Long position, your SL must be below the entry price.
Thanks, there is still one thing I can’t find. My account is denominated in EUR and if I’m going to trade GBP/JPY:
1)Where do I see the pip price in MT4?
2)Besides, why are pip prices same for more currency pairs (seen from the Jason print screen)?
3)In my case when trading EUR/USD, are my profits/losses calcualted based on “pip prices” which I can’t see in MT4 or do I calcualte them based on BID/ASK in this case.
Ok, I found it, there is a calculator on this site (search for it,can’t post link yet), which helps you calculate the pip value in case you trade currency pairs different from currency you account is denominated, but you can calculate it yourself too usign ASK price. Unfortunatelly MT4 doesn’t show pip price anywhere, or at least I can’t find it
So I did read most of the school tutorial on this site, which by the way is pretty good… So I downloaded the mt4 platform and opened a demo account on fxcm ltd. Since I live in EU with EUR currency I thouht is it was more appropriate to open an EUR account, so now I have a 3.000 EUR account to learn to play the game 
