What is Forex

What is Forex

Forex Trading in us is to trade a foreign currency against other foreign currencies online and realtime (spot trading) with the aim of getting the maximum profit possible. The basis of playing strong forex will make your trading direction more directed. It is possible to trade foreign currencies online (non-physical) where profits can be obtained from the exchange rate incurred at that time. We are in charge of bridging you to be able to connect to the world money market online and realtime. This online Forex trading can be realized through special trading software, Metatrader, which you can download at our brokerage company.

For example: the screen of our trading software at that time contained the price of a currency worth 101.00 and then you BUY in that currency, then when the price of the currency rises to 102.10 you then release it / sell it, and from that you will get profit of 102.10 – 101.00 = 110 points. And 110 points of profit can be converted into US Dollar value and you can disburse it to your bank account directly and in cash (see how to calculate it in the explanation below later). Of course, to start trading forex, capital must be required (placement of funds / deposits), and this capital is like the stock of your goods and you can use at any time to buy or sell a foreign currency that you want to trade. And the unit used for the currency that you want to trade is in the form of Lot (as well as “how many” or “how many dozen” in the parable) And Here is the basic explanation of Forex and the Calculation Method:

Know the Right Forex Play Basics

» What is Forex and what is traded on forex?

FOREX trading (Foreign Exchange) or better known as Forex (Foreign Exchange) is a type of transaction that trades the currency of a country against the currencies of other countries. With an average daily volume of above US $ 3 trillion, the Forex Market is 46 times larger than all the stock market combinations and because it’s called the most liquid market in the world. Forex Market is a market that is open 24 hours continuously

» How does Forex work?

Trading Forex (Foreign Exchange) is the exchange of 1 currency against other currencies in order to get profit (profit) from the difference in the exchange rate. For example: A trader benefits from a transaction BUY Pound Sterling (Great Britain Pounds / GBP)

What Traders Do Great Britain Pounds (GBP) US Dollars (USD)
A trader buys 10,000 pounds at the beginning of February 2007 when the price is GBP / USD 1.9800. (Buy GBP / USD) +10,000 -19,800 *
The next day, the Trader redeemed 10,000 pounds to US $ 2,0000. (Sell GBP / USD) -10,000 +20,000 **
In this example, the Trader gets a gross profit of $ 200. 0 +200

* $ 10,000 x 1.9800 = US $ 19,800 (The trader buys GBP 10,000 by selling US $ 19,800) ** $ 10,000 x 2.0000 = US $ 20,000 (The trader sells GBP 10,000 by buying US $ 20,000)

Action Meaning
Buy EUR / USD Buy EUR by selling USD
Sell ​​EUR / USD Sell ​​EUR to buy USD

» Currency Pair Currency (Currency) is always a pair or pair because every forex transaction means you buy a currency and at the same time sell other currencies. For example the rate / exchange rate for GPB / USD pair is GPB / USD = 1.8500 , meaning that 1 pound GBP is 1.85 USD. Cross Rate is a currency pair (pair) that does not contain the official currency of the country where the currency is traded, for example forex transactions are carried out in America (the official currency is USD). This means that a currency pair that does not contain USD is a cross rate of USD. Examples are GBP / JPY, EUR / GBP, etc. Pair that does not contain USD and involves EUR is called euro cross like EUR / GBP. Currency pairs (Pair) consist of 2 different currency quotes. The currency located on the left is the base currency . for example in GBP / USD pair GBP is called base currecy . While USD is the quote currency or counter currency . An example is the quote EUR / USD 1.2500 , where EUR is base currecy and USD is the quote currency . That means EUR 1 is worth US $ 1.25. If the quote moves from EUR / USD 1.2500 to EUR / USD 1.2510, then the Euro strengthens and the US dollar weakens . Likewise vice versa if the quote moves from EUR / USD 1.2500 to EUR / USD 1.2490, then the Euro weakens and the US dollar strengthens

Currency Pair Moving Chart (Chart) EUR (base) USD (quote)
EUR / USD Go up Strengthen Weaken
EUR / USD Down Weaken Strengthen

If you BUY EUR / USD then you buy the base currency (EUR) and at the same time sell the quote currency (USD). If you SELL EUR / USD then you sell the base currency (EUR) and at the same time buy the quote currency (USD).

Buy EUR / USD -> Buy EUR / Sell USD Sell ​​EUR / USD -> Sell EUR / Buy USD

Another example: Pair EUR / USD : For EUR predictions to strengthen against USD, you can BUY EUR / USD For USD predictions to strengthen against EUR, you can SELL EUR / USD Pair USD / JPY : For USD predictions to strengthen against JPY, you can do BUY USD / JPY For JPY predictions to strengthen against USD, you can SELL USD / JPY

» Major Currencies Major common currencies and often traded in the world are:

Symbol Country Currency
USD United States Dollar
EUR Euro members Euro
GBP Great Britain Pound
JPY Japan Yen
CHF Switzerland Franc
CAD Canada Dollar
AUD Australia Dollar

» World Forex Market –  Forex market is a 24-hour continuous market that is open 5 days per week. The table below we divide into 2, namely based on the New York Time at Day Light Saving Time (DST) and Eastern Standard Time (EST or ET). Starting from 9 March 2008 – 2 November 2008 using DST, while from 2 November 2008 – 8 March 2009 using EST, and so on. You can check the full list at http://timeanddate.com/worldclock/timezone.html?n=179

Timezone New York (ET / EST) GMT WIB
Tokyo Open 7:00 pm 00:00 7:00
Tokyo Close 4:00 am 9:00 16:00
London Open 3:00 am 8:00 15:00
London Close 12:00 pm 17:00 00:00
The New York Open 8:00 am 1:00 p.m. 8:00 p.m.
New York Close 5:00 pm 10:00 p.m. 5:00
Timezone New York (DST) GMT WIB
Tokyo Open 7:00 pm 11:00 p.m. 6:00
Tokyo Close 4:00 am 8:00 15:00
London Open 3:00 am 7:00 2:00 p.m.
London Close 12:00 pm 16:00 11:00 p.m.
The New York Open 8:00 am 12:00 19:00
New York Close 5:00 pm 9:00 p.m. 4:00

» The Smallest Currency Unit (point / pip) and Contract Size Point (pip) are the smallest units of price movement in forex. One point (pip) for GBP / USD pair is 0.0001 while one point for pair USD / JPY is 0.01. Example: Pair GBP / USD, movement of 1.8500 to 1.8550 is 50 points.Value per point (pip) depends on the number of contract sizes and currencies used. Whereas Lot is a collection of contract sizes, like one dozen = 12 pieces. But in the standard forex unit for 1 Lot = $ 100 thousand contract size. Contract Size (or quantity of Lot) is the smallest amount in forex trading. In general, the contract size that is often used is for quantity Standard, Mini and Micro . Standard Lot equals $ 100,000, Mini Lot is $ 10,000 and Micro Lot is $ 1000. If your forex broker facility supports Standard and Mini Lot, then you can trade with a multiple of 100,000 and 10,000. For example (in contract size): $ 30,000 (0.3 lot), $ 120,000 (1.2 lot), and others. 1 lot = contract size quantity 100k (100000). Regular 0.1 lot = contract size quantity 10k (10000). Mini 0.01 lot = contract size quantity 1k (1000). Micro Mixed Lot Example Combination (flexible lot): 1.25 lot = contract size 125000 0.16 lot = contract size 16000 and others

» Quote / rate of currency Quote forex consists of the price of 2 prices, namely lower prices (Bid) and higher prices (Ask / Offer) . Bid is the price you sell to a forex broker (dealer) or the price at which a forex broker (dealer) wants to buy from you. While the Ask / Offer is the price you buy from a forex broker (dealer) or the price at which a forex broker (dealer) wants to sell to you. Bid is generally lower than Ask. The difference between Bid and Ask prices is Spread . The smaller the spread of forex dealers, the more profitable traders. Quote from forex looks like this:

Sell ​​(Bid) / Buy (Ask): 1.2293 / 1.2296

namely Quote EUR / USD Bid / Ask: 1.2293 / 96. This means that the selling price to your broker is 1.2293 and the purchase price of the broker is 1.2296. the spread 1.2296-1.2293 is 3 points. Example: You open BUY (Long) EUR / USD at the price of 1.2296 (Ask), then if Bid now shows the price of 1.2293, that means you still lose -3 pips. Because of this, every time you open a position it can be ascertained to be minus the size of the spread (i.e. 3 for EUR / USD). To get profit you have to wait until the Bid price in the price table rises more than 1.2296. Please remember: If you open a Buy (Long) position , it means that you open a position with the ask price, and then it will be closed (close / liquid and also includes stop loss) and profit targets) using bid prices. If you open a Sell position (Short) , it means that you open a position with the bid price, and then it will be closed (close / liquid and include stop loss and profit target) using the ask price.

Position Open with Close (TP * / SL **) with
Buy (Long) Ask price Bid price
Sell ​​(Short) Bid price Ask price

* TP = Take Profit ** SL = Stop Loss

» What do LONG and SHORT positions mean? LONG position or open BUY is a position where a trader buys a currency at a certain price and aims to sell it later at a higher price. So the investor benefits from a rising market (pair chart rises). Suppose you buy in the position of 1.1500 then sell at 1.1525 then you will get a profit of 25 points / pips. LONG or open BUY is expecting the price of a currency pair (pair) UP for profit. (pair chart rises) Example: Long (BUY) eur / usd then you expect the eur / usd chart to rise or the euro strengthens against usd. The rising price of a pair can also mean that the currency in FRONT of the pair strengthens against the currency behind the pair.Example: Eur / usd Pair price chart Rises then the euro strengthens against usd. The price used when OPEN BUY / LONG is the purchase price (ASK) and the price used when you close / liquid is the selling price (BID). If we open Buy (Long) using the Ask Price, then the Bid Price in the price table must be HIGHER than the Ask Price (the price opens Buy position) in order to get Profit. For convenience, the LONG position is often abbreviated as BUY SHORT or open SELL position is a position where a trader sells a currency at a certain price and aims to buy later at a lower price. So the investor benefits from a down market (pair chart goes down) . SHORT or open SELL is expecting the price of the currency pair (pair) DOWN for profit. Example: Short (SELL) eur / usd then you expect the eur / usd chart to be DOWN or the euro weakens against usd. The decline in the price of a pair can also mean that the currency in FRONT pair weakens against the currency behind the pair. Example: Graph of eur / usd Pair price DOWN, meaning that the euro weakens against usd. The price used during OPEN SELL / SHORT is the selling price (BID) and the price used when you close / liquid is the purchase price (ASK). If we open Sell (Long) using the Bid Price, the Ask Price at the price table must LOWER than the Bid Price (the price opens Sell position) so that the Profit For convenience the SHORT Position is often abbreviated as SELL

Position Open with Close with When the price rises When Prices Decrease
Long Buy Sell Profit Loss
Short Sell Buy Loss Profit

» High, Low, Open, Close

  1. High: Record the highest price from the time of opening to the end of a certain period. (example: on a 5 minute chart / timeframe, the highest price that occurs for 5 minutes is high)
  2. Low: Record the lowest price from the time of opening to the end of a certain period. (example: on a daily chart / timeframe, the lowest price that occurs during the day is low)
  3. Open: Opening price of a certain period. (example: on a 5-minute timeframe chart, the price starts with 2.0000. Then the open price in the 5-minute range is 2.0000)
  4. Close: The closing price of a certain period. (example: on the chart the 5 minute timeframe in the example above ends with a price of 2.0050. Then the close price in the 5 minute range is 2.0050)

» Market Order A market order means that a trader will make a transaction at the current price. To Buy means to buy the “ask” price that applies at that time, or to Sell means to sell at the “bid” price that applies at that time. For example, if you buy a EUR / USD pair, the market at that time shows 1.2934 / 1.2938. This means your broker wants to buy EUR / USD from you at the price of 1.2934 and sell to you for 1.2938.

» Stop Order and Limit Order (Pending Order) (Placing Contingent Orders may not limit your losses to the intended amounts) Pending orders are automatic orders to open a Long / Short position only when the price you order / message is reached. If the price you ordered has not been reached, then the pending order will still be active and will wait until the price you order is touched. Pending orders can be divided into 2, namely Pending Stop Orders and Pending Limit Orders . If you only want to buy ABOVE the current price, use the Buy Buy Order . And if you only want to sell below the current price, use the Sell Stop Order . If you only want to buy below the current price, use the Buy Limit Order . And if you only want to sell ON the current price, use the Sell Limit Order . Example: The current ASK price is 2.0000 and you only want to buy (LONG) if the price moves to 2.0050 then you can use the Buy Stop Order. (Remember the open buy / Long price used is the ASK price!) Example: The BID price is now 2.0000 and you only want to sell (SHORT) if the price moves to 1.9950 then you can use the Sell Stop Order. (Remember the open sell / Short price used is the BID price!) Example: The current ASK price is 2.0000 and you only want to buy (LONG) if the price moves to 1.9950 then you can use the Buy Limit Order. (Remember the open buy / Long price used is the ASK price!) Example: The current BID price is 2.0000 and you only want to sell (SHORT) if the price moves to 2.0050 then you can use the Sell Limit Order. (Remember the open sell / Short the price used is the BID price!)

Order Type Buy (Long) Sell ​​(Short)
Market Buy at the Ask price at that time Sell ​​at the Bid price at that time
Stop Pending Order Buy above the current price (Ask) Sell ​​below the current price (Bid)
Limit Pending Order Buy below the current price (Ask) Sell ​​above the current price (Bid)

» Pending Order active period

  1. GTC (Good Till Canceled) Good Till Canceled means that the pending order will remain active without a time limit, unless the trader cancels it manually. GTC is the default of Pending Orders
  2. GTD (Good Till Date) Good Till Date means the pending order will remain active until the set time limit
  3. OCO (Cancels Other Order ) Cancels Other order means traders order 2 pending orders at once. If one of the pending orders is touched, then another order (opposite) will be canceled

» Calculating Profit / Loss The smallest price movement is calculated in units of points / pips. The value of each point varies according to the type of currency pair (pair) , the number of contract sizes used . Contract size is usually stated in lot units, namely Standard lot (100,000) , Mini lot (10,000) , or Micro lot (1000) . There are 3 types of currency pairs:

  1. Direct Rates are pairs with USD as the counter currency (USD located behind), for example: GBP / USD, EUR / USD, AUD / USD, and NZD / USD
  2. Indirect Rates are pairs with USD as the base currency (USD is located in front), for example: USD / JPY, USD / CHF, and USD / CAD
  3. Cross Rates are pairs that do not contain USD, for example: GBP / JPY, EUR / JPY, AUD / JPY, EUR / GBP, and GBP / CHF

For Direct Rates currencies for example (GBP / USD, EUR / USD, AUD / USD, and NZD / USD) the way to calculate profit / loss is as follows:(Selling Price – Buy Price) x contract size x lot = Calculation of profit / loss Example:

  1. Buy 3 standard lots of EUR / USD 1.2000 Sell (liquid) 3 lots EUR / USD 1.2010 Profit = (1.2010 – 1.2000) x 100,000 x 3 = $ 300
  2. Sell ​​1 standard lot GBP / USD 2,0001 Buy (liquid) 1 lot GBP / USD 2.0000 Profit = (1.2001 – 1.2000) x 100,000 x 1 = $ 10

Specifically for currencies ending in / USD, there is an easy calculation method, namely: From the above conclusion, it means that the profit of 1 point for the standard lot (100K) of the currency ending in / usd is $ 10. While the value of 1 point for 1 mini lot (10K) is $ 1 and for micro lot (1K) per point is $ 0.1. For Indirect Rates, for example (USD / JPY, USD / CHF, and USD / CAD), the way to calculate profit / loss is as follows: [(Selling Price – Buy Price) / Liquidation Price] x contract size x lot = Calculation of profit / loss Example:

  1. Buy 1 standard lot of USD / JPY 110.00 Sell (liquid) 1 lot USD / JPY 110.01 Profit = [(110.01 – 110.00) / 110.01] x 100,000 x 1 = $ 9.09

For Cross Rates, for example (GBP / JPY, EUR / JPY, AUD / JPY, EUR / GBP, and GBP / CHF) the calculation of profit / loss is as follows:{[(Selling Price – Buy Price) x Rate Base Currency Currently] / Current Pair Rate} x contract size x lot = profit / loss calculation Example:

  1. Sell ​​1 lot of EUR / GBP at the price of 0.6760 (EUR / USD is the base currency of EUR / GBP, because the front of EUR / GBP is the Base Currency) Buy (Liquid) EUR / GBP at the price of 0.6750 Rate EUR / USD: 1.1840 Profit = { [(0.6760 – 0.6750) x 1.1840] / 0.6750} x 100,000 = $ 175.4

» Margin and Leverage The term leverage (leverage factor, usually in the ratio of 1:50, 1: 100, 1: 200 and 1: 400) in forex margin trading means that if you want to trade for $ 10,000, you don’t need to provide $ 10,000 but enough, provide margin $ 100 (leverage 1: 100) as a guarantee fund to your broker. (This is the same as you do transactions at a money changer or at a bank using a $ 10,000 cash fund, but in spot forex trading online (the margin trading with leverage) then you only need to provide $ 100) (The higher leverage will become more risky also on your trading account , because for higher leverage if you suffer losses in your trading account then you have the potential to lose more capital than low leverage Examples of high leverage: more than 1: 400, Example of low leverage: 1: 100. Normally normally is 1: 100 or 1: 200) So the margin can be interpreted as a guarantee that is temporarily held by the broker when you trade. Margin will be immediately returned to your account after you close / liquid the position that you open. For example you have cash $ 1000 at a broker that has a leverage of 1: 100. This means that you can trade with amounts up to close to $ 100,000 (or almost 100X your capital). This also means that to use a $ 100,000 size contract you need a 1% margin of $ 1000. Another example: You have a capital of $ 500 and your broker has a leverage of 1: 100, so if you want to buy using 1 mini lot (10,000) then the margin held is 1% of the total contract amount (10,000) that is (1% x 10,000) or use a $ 100 margin. This means that your capital that will be temporarily detained and used as collateral / margin by the broker is $ 100, the remaining $ 400 is used to hold your loss. And if one day you have liquidated the position then the $ 100 margin will be returned to you. The advantage of leverage is that with smaller capital you can trade with the same contract size / lot as if you did not use leverage. Or you could say, with the same capital, you can use a contract size greater than not using leverage. So with the same capital, you have the opportunity to get a bigger profit per pip.

With Leverage or No Leverage? (assuming a capital of $ 1000, using 0.01 lots)

Leverage Margin Requirements Margin Used Contract Size Profit
1: 1 (without leverage) 100% $ 1,000 $ 1000 $ 0.1 / pip
1: 200 0.5% $ 5 $ 1000 $ 0.1 / pip

» Margin Calculation Method There are 3 types of currency pairs:

  1. Direct Rates are pairs with USD as the counter currency (USD located behind), for example: GBP / USD, EUR / USD, AUD / USD, and NZD / USD
  2. Indirect Rates are pairs with USD as the base currency (USD is located in front), for example: USD / JPY, USD / CHF, and USD / CAD
  3. Cross Rates are pairs that do not contain USD, for example: GBP / JPY, EUR / JPY, AUD / JPY, EUR / GBP, and GBP / CHF

How to Direct Margin Calculation (GBP / USD, EUR / USD, AUD / USD, and NZD / USD): Margin Percentage x Contract Size x Lot x Current Price = Margin Example:

  1. Sell ​​3 mini lots of GBP / USD at the Bid price of 2.0000 (Remember the Sell open uses the bid price!) 0.01 x 10,000 x 3 x 2.0000 = $ 600 (Leverage 1: 100)

Indirect Margin Calculation Method (USD / JPY, USD / CHF, and USD / CAD): Margin Percentage x Contract Size x Lot = Margin Example:

  1. Buy 2 mini lot of USD / JPY at Ask price 110.00 (Remember the open Buy uses the ask! Price) 0.01 x 10,000 x 2 = $ 200 (Leverage 1: 100)

Margin Cross Rates Calculation Method (GBP / JPY, EUR / JPY, AUD / JPY, EUR / GBP, and GBP / CHF): Margin Percentage x Contract Size x Lot x Middle Price (*) Now = Middle Price Margin (*) = (Bid + Ask Price) / 2 (Don’t forget the Base Currency is the basic Currency located in front of the pair. For example EUR / GBP pair -> EUR is a BASE Currency , GBP is QUOTE Currency ) Example:

  1. Buy 1 mini lot of EUR / GBP at the Ask price of 0.8020 (Remember the open Buy uses the ask! Price) Bid / Ask price of EUR / USD 1.5800 / 02 (because the Base Currency is EUR, then the price used is EUR / USD) Middle price EUR / USD = (1.5800 + 1.5802) / 2 = 1.5801 0.01 x 10,000 x 1 x 1.5801 = $ 158.01 (Leverage 1: 100)

» Profit Target, Stop Loss and Trailing Stop Target profit is an order to automatically liquidate a position at a certain price when a trader has obtained a number of profits.

  • If you Open Buy / Long then the target is located above the price you open the Open Buy / Long position . (Remember! Open Buy / Long uses ASK prices while Target and Stop Loss are based on BID prices) Example: Buy EUR / USD 1.2000, Profit Target 1.2050 (for 50 profit points)
  • If you open sell / short then the target is located below the price you open the open sell / short position . (Remember! Open Sell / Short uses BID prices while Target and Stop Loss are based on ASK prices) Example: Sell EUR / USD 1.2050, Profit Target 1.2000 (for 50 point profit target)

Stop Loss is an order to automatically liquidate a position at a certain price to limit losses that might occur if the market moves against the position of the trader.

  • If you Open Buy / Long then the stop loss is located below the price you open the Open Buy / Long position . (Remember! Open Buy / Long uses ASK prices while Target and Stop Loss are based on BID prices) Example: Buy EUR / USD 1.2050, Stop Loss 1.2000 (for stop loss 50 point loss)
  • If you open sell / short , the stop loss is located above the price you open the open sell / short position . (Remember! Open Sell / Short uses BID prices while Target or Stop Loss is based on ASK prices) Example: Sell EUR / USD 1.2000, Stop Loss 1.2050 (for stop loss 50 point loss)

Stop Loss can also function to protect the profit you get (lock profit). The trick is to change the position of the stop loss up (to Buy) or down (to Sell). Example: A trader opens Buy at 2.0000, TP (Take Profit) at the level of 2.0050, SL (Stop Loss) at the level of 1.9970. After a while, the price has moved in the expected direction (up) at the 2.0040 position. In this case the trader is in a floating profit position (open position and in a state of profit) of 40 points. To protect profit as much as 20 points, the trader can move the stop loss at the open price + 20 points, namely 2.0020. Why is it 20 points? The requirement is that the profit you want to lock, must be smaller than the current profit floating (20 <40 points). If the floating profit then moves to 60 points, the trader can raise the stop loss again to the position of 2.0040 to lock profit by 40 points, and so on. This is the basis of the trailing stop. After inputting Take Profit and Stop Loss, the data will be stored on the Forex Broker server. So you don’t need to worry and can turn off the computer at any time / disconnect the internet connection. Take Profit and Stop Loss will still function WITHOUT having to turn on the computer and connect with forex brokers via the internet

Position Profit Target Stop Loss
Buy (Long) Higher than Open Price (based on bid price) Lower than Open Price (based on bid price)
Sell ​​(Short) Lower than the Open Price (based on the ask price) Higher than Open Price (based on ask price)

Trailing Stop is a facility provided by a forex broker who can change stop loss to automatically lock profit in multiples of a certain amount.Trailing Stop is the development of stop loss. Trailing Stop generally only works if the trader position has been PROFITED MORE THAN CERTAIN MINIMUM VALUES that have been determined by the broker (eg minimum 15 points). (IMPORTANT: Generally trailing stops run locally on your computer, not on the broker’s server! If your computer dies, trailing stops become inactive) (unless you have used stop loss).So you should set stop loss first, then if necessary you can add trailing stop feature as a complement. By using this feature you will avoid loss if your profit has exceeded the minimum trailing stop. Example: Buy EUR / USD 1.2050, Stop Loss 1.2000, Trailing Stop 15 points. If the BID price is now at 1.2070 (has a profit of 20 points) then the trailing stop will change the stop loss to the price of 1.2055 (20 points profit minus 15 points, ie profit +5 points). This means that your profit has been locked at 5 points (in the new stop loss position at 1.2055). Point A: And if the price turns down to 1.2055, it will automatically be added to the 5 point profit. This means that you can no longer lose because you have been locked. But if the price does not go down (according to point A) but the price continues to rise from 1.2050 to 1.2095 (has 45 point profit) then the trailing stop will change the stop loss to the price of 1.2080 (45 point profit minus 15 points, ie profit +30 points). This means that your profit has been blocked by 30 points (on the new stop loss position at 1.2080).

» Margin Call 

Margin call means “forced” liquidation done automatically by the broker system because your account does not have sufficient funds to hold your losing position. (% Margin Level indicator is below 100%)

  1. Margin Level The margin level system is used on the MetaTrader platform. (Please order with a demo account so that you better understand the margin calculation on the MetaTrader platform) The margin level calculation formula is: Margin Level = Equity / Margin used X 100% Equity = Margin + Free Margin + Profit – Loss Balance = Current capital (not to be reduced profit & loss) Equity is your Balance after adding / subtracting profit & loss When all positions are clear (no open), Balance = Equity. Because the Margin used = 0, Profit / Loss = 0, so the Free Margin becomes equal to Balance. (See the Equity formula above!). Free Margin is a fund that you can withdraw if there is an open position (leave enough free margin funds to hold loss and prevent Margin Call) For example the broker determines Margin Call to occur if the Margin Level is 100%, then if “Margin used” x 100% = Equity , margin call will occur. (one by one the open position will be closed automatically by the broker until the trader funds are enough to cover the loss). On the MetaTrader platform, a trader does not need to manually calculate the Margin Level, because if there is an automatic open position the Margin Level will appear on the “Trade” Tab in percent (%) units. What traders need to do is to keep the Margin Level from approaching the Margin Call broker’s limit. (If your% position margin level is below 100% then the condition of your trading account can already be “very risky” and can be forced to close automatically by the broker system to avoid further losses or to avoid the balance of money being negative)
  2. Initial capital – Margin – Loss = 0 Broker system with a 100% margin that is to determine the margin call if the initial capital – Margin used – Total loss = 0. Initial capital deposit of $ 300 . If a trader opens 1 trading position GBP / USD mini lot (10000) requires a margin: 10000 (mini lot) x 0.0025 (leverage 1: 400) x GBP exchange rate for example 2.0000 = $ 50. Then the temporarily retained capital as a guarantee to open 1 GBP / USD mini lot is $ 50. So the remaining margin of the trader to hold loss is: $ 300 – $ 50 = $ 250 If your floating loss (loss) reaches $ 250 then there is no margin / funds left to hold loss, so that one by one your position will be closed automatically by the broker. Then the $ 50 margin which is temporarily locked as a guarantee for opening 1 GBP / USD position, will re-enter your account after the position is clear / close so that your margin is left only $ 50).

» Calculation of Interest / Swap / Rollover / Interest Stay Interest / Swap / Rollover / Interest Stay is the interest earned or must be paid by a trader if there is an open position exceeding 1 trading day. The limit of 1 trading day is if the position is not closed until the closing time of the world Forex Market, which is at the time of closing the New York Market at 4:00 p.m. (New York time). To convert New York time to your local time, please go to: http://www.timeanddate.com/worldclock When trading forex, the actual day used is the next 2 days.Example: Trading on Thursday then the actual day is Monday (interest is calculated 1 day). Trading on Friday then the actual day is Tuesday (interest is calculated 1 day), and so on. While specifically for Wednesday, the actual day is 3 days, namely Friday, Saturday and Sunday. (interest is calculated 3 days). Although Saturday and Sunday the forex market is closed, interest is calculated as 3 days as compensation for trading holidays. In the calculation of interest: The trader will get a positive interest if the currency purchased has an interest rate greater than borrowed Example: Pair USD / JPY. Interest Rate USD = 5.25%, Interest Rate JPY = 0.5% Buy USD / JPY means traders buy USD by borrowing JPY. Because the interest rate of the purchased currency (USD) is greater than the borrowed (JPY), the trader will get an interest of: 5.25% – 0.5% = 4.75% If the trader sells USD / JPY (meaning borrowing USD and buying JPY), it will be charged a charge of: -5.25% + 0.5% = -4.75% Example 2: Pair EUR / USD. EUR Rate = 3.75%, USD Rate = 5.25% Buy EUR / USD means traders buy EUR by borrowing USD. Because the interest rate of the purchased currency (EUR) is smaller than the borrowed (USD), the trader will be charged a charge of: 3.75% – 5.25% = -1.5% If the trader sells EUR / USD (means buying USD and borrowing EUR) , it will get an interest of: -3.75% + 5.25% = 1.5% Each forex broker generally provides a list of interest rates (per day) for each pair used. The list usually lists the interest charged for Buy and Sell positions. (can be in $ or in points). If the point then the trader must convert first to the dollar by calculating the value per point of the relevant pair.

» Hedging Techniques

Hedging is a condition where we open 2 positions opposite the currency and the same lot number. Often hedging is used if the price reverses direction and the trader does not want the loss to increase without a cut loss (closing the position despite the loss). In general, they use this technique without stop loss. Another term for hedging is locking . Example: A trader opens Buy EUR / USD 1 lot then the price moves not according to expectations (down) and the position is still floating loss (floating loss) 20 points, the trader can open Sell EUR / USD 1 lot on the same currency so the loss The lock is only 20 points. Although the price moves in any direction, floating loss remains 20 points

» Averaging 

Averaging techniques are one way to minimize defeat by opening similar positions at different levels. The purpose of this averaging is to use an average of the different price levels ordered to minimize loss. Example: A trader opens Buy EUR / USD 1 lot at a price of 2.0100, but the price moves down to the level of 2.0000 so it experiences a floating loss of -100 points. The trader can do averaging by opening a Buy position EUR / USD 1 lot at the price of 2,0000 right away. This means there are 2 open positions. The first floating loss position is -100 points. Second position 0 points. (assumption without taking into account the spread). If then the price moves up towards 2.0050 then the first position of the floating loss is -50 points, the second position is profit 50 points. In total, both positions break even (BEP). When prices move up above the 2.0050 level. So that means the trader has profit.

» Scalping Trading

Scalping Technique is a trading technique on Forex that utilizes market momentum while moving flat or zig zag (bouncing in a small way), by opening and closing orders in a short time (generally less than 5 minutes) and in a continuous frequency continuously.With the hope of taking small profits but can produce considerable value due to the frequency of the barrage. Generally, scalping techniques are using a currency pair that is not too volatile and carried out during market hours.

» Martingale 

Martingale technique is a trading technique that utilizes multiplication (usually x2), with the hope that victory in the last position can cover losses in all previous losing positions. Example: Open Buy 0.1 lot, after loss then the Open will only return to 0.2 lots, then loss then open again in 0.4 lots, and so on until the last position reaches profit which can cover losses from all previous positions. For the use of martingale techniques, you must use a small initial lot and large capital, so that it can make your trading close to the Holy Grail, which is perfect trading. The greater your capital and the initial lot, the smaller the stronger your trading account will be. But please be careful too because the martingale technique can also result in very fatal losses if there is a slight error or done carelessly. This is why the basis of playing good and true forex is needed by every trader