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Forex Currency Market Report: Futures Trading Principles

by rogermveasley

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If you are looking for reliable source of constant income then you can try to trade futures within your own Forex currency market report system. The basics of such approach you will find below.

 

The word "futures" obviously means "future" in the plural. This term within Forex currency market report course has originated in the 60's of XIX century. In such way has affected the agreement reached between American farmers and agricultural manufacturers who regularly traded (mainly grains) in the link wholesale market.

 

Agreement did not anticipate the trade in goods and obligations, standardized contracts for future delivery and payment, guarantees up to the agreement which the parties assumed the Chicago Mercantile Exchange was founded in 1848, 82 merchants and which from the outset to carry out an operation of the cash commodity in pre-arranged price between customers. It was a term agreement with the delayed implementation of that in American practice called as "forwards". This is the spot exchange for the first time in history has become an organized futures market (stock exchange market and only then as Forex currency market report) with the introduction in 1865 of impersonal sales contracts.

 

Futures contract is a standardized exchange contract between two parties to buy or sell a specific product or financial instrument if we talk about Forex currency market report. Need more information? Visit our blog and read <a href=""></a> According to the contract, one party (the buyer of the contract) agrees to buy and another party (the seller of the contract) to sell product or instrument discussed in advance in the price stipulated date. Standard contract terms define:

•          products (indices, currencies, gold, oil, wheat, non-ferrous metals, livestock) and other financial Forex currency market report instruments;

•          quantity (amount in currency weight in ounces of gold, the amount of oil in barrels, the amount in bushels of wheat, cattle weight in pounds);

•          the date of delivery of goods (day, month and will expire when the term of the contract).

 

Price futures contract is formed directly on the exchange rate, depending on supply and demand. Price of the contract is the amount that the buyer (seller) agrees to pay the contract (to take) the purchase (delivery) for a fixed number of the specified goods at the time of discharge of employment. Checkout 2.0 profile - <a href="">forex trading</a>

 

Buying a futures contract does not imply prepaying the entire amount of money equal to the price of goods in quantity within a particular contract. The essential requirement is a security deposit - the so-called initial margin - the value of which varies depending on product futures. In practice, Forex currency market report margin is ranged from 2 to 10% of the total quantity of goods specified in the contract.

 

Forex currency market report margin serves as collateral, which is kept partly in return in case of adverse market dynamics. There is also analysis of maintenance with variation margin. Initial Forex currency market report margin has always more variations of margin that is required to support an open position. If the first account contains not enough resources to support variation margin, there is a margin call - demand for the replenishment of a margin account. In this case within the next day account is not replenished, the broker automatically closes the position on the current Forex currency market report market price.To Know more about us click here at www.liteforex.com

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5. Forex Currency Pair Risk/Reward Calculator: How to Calculate Loss and Profits?

 

We have already thoroughly reviewed the basic terms and concepts required in the Forex currency trading. Now is the time to learn how to calculate gains and losses on transactions by means of different techniques using advantages of Forex currency pair risk/reward calculator methods. Below you will get the info that may be useful for a trader looking for the tools how to predict possible losses and possible profits.

 

We know that the Internet trader enters the international currency market by dealing company, which offers him an account in U.S. dollars. To work on the forex market a trader needs to transfer an initial amount of money on this. All gains and losses from transactions, regardless of the currency transactions are exchanged into U.S. dollars. Below we will consider in details the principle of Forex currency pair risk/reward calculator methods.

 

In general, the formula involving Forex currency pair risk/reward calculator can be described as the following:

 

The required financial result equals to (sale price minus purchase price) multiplied by number of lots *(Lot size - Fees * ± number of lots of the bank interest rate). As we can see, the financial result is made up of three parts: the trading result, paid fees and the bank interest.

 

We already know that there are two types of quotations at the Forex market (not including cross training) - forward and backward ones. In the first case, the base currency quotes a foreign currency against U.S. dollar and expressed (quoted) in U.S. currency as well. Related blogpost Manage Your Forex Capital Correctly. In the second case, dollar itself is the base currency quote, and is expressed in units of other supporting foreign currency. Trading result in the above formula is calculated in the quoted currency. The commission and bank interest are usually expressed in U.S. dollars, so the formula is valid only for direct quotations. It should be noted that in this formulation selling price and buying price – do not make up quotes and the actual price for which we sold and bought foreign currencies, no matter what kind of operation was used (buy or sell transaction). If the financial result is positive, then we get a profit. If negative, then we have a loss. This is how the simplest Forex currency pair risk/reward calculator works.

 

For backward quotes difference between the buying and selling prices expressed in foreign currency, while the overall financial result is expressed in dollars.Add me to friends forex.Therefore, to use Forex currency pair risk/reward calculator properly the financial result for the inverse of the quotations has to be used with the following formula:

 

Financial result equals to (1/buying price minus 1/selling price) multiplied by the number of lots *(Lot size - Fees * ± number of lots of the bank interest).

 

The lot size depends on the quotes (from the currency pairs) and the preference of a particular Internet broker. The above mentioned formulas involving common principles of Forex currency pair risk/reward calculator are used if the lot size which is expressed in foreign currency (not in U.S. dollars).

 

Calculation of financial results for the cross rates is somewhat different. Cross trading presupposes the FX exchange rates with respect to each other, excluding the U.S. dollar. Any cross-rate can be represented by two dollar quotes. For example, the cross rate EUR/JPY may be calculated through the quotation of EUR /USD and the quote of the major currency pair USD/JPY. Profit and losses can be calculated with the forex online currency pair risk/reward calculator in this case as it described below. First, the financial result is calculated on the quotation EUR/USD, and then it is calculated as the financial result for the quote USD/JPY. These financial results are added together to produce the overall financial result.

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