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By Adam Khoo
adam@akltg.com
Copyright ©
Adam Khoo Learning Technologies Group Pte Ltd 2017
What is Forex?
• The Foreign Exchange (Forex) market is one in which a nation’s
currency is traded for that of another at a mutually agreed rate.
• Forex market is run electronically within a network of banks, 24 hours,
5 days a week.
• Largest market in the world- $3 trillion per day versus $500 billion for
stocks
Successful traders only trade the most common & liquid 7 pairs:
EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD, NZD/USD
and USD/CAD.
Currency Exchange Rates
Currencies Are Quoted in Pairs and mostly in 4-decimal places.
If you want to buy 1 Euro, you would have to pay 1.3505 US dollars. If you
want to sell 1 Euro, you would receive 1.3505 US dollars.
•For JPY forex pairs, 1 pip represents the 2nd decimal place of the quote. E.g.
When USD/JPY moves from 80.55 to 80.87, it is a movement of 32 pips.
Contract Lot Sizes
Currency Pair 1 Standard Lot 1 pip
EUR/USD EUR 100,000 0.0001
USD/CHF USD 100,000 0.0001
GBP/USD GBP 100,000 0.0001
USD/JPY USD 100,000 0.01
GBP/JPY GBP 100,000 0.01
AUD/USD AUD 100,000 0.0001
1 standard lot = 100,000 of the base currency
Contract Lot Sizes
A standard lot is 100,000 units of the base currency.
E.g. When you buy one standard lot of EUR/USD, you are buying 100,000 Euros
with US dollars
Standard 100,000
Mini 10,000
Micro 1,000
Nano 100
Calculating Forex Profits
Profit/Loss =
No. of Pips
x No. of Lots
x $Value Per Pip Per Standard Lot
$Value per pip per standard lot is USD10 or about USD10 for most
of the actively traded pairs (i.e. EUR/USD, GBP/USD, AUD/USD)
Go to https://www.mtpredictor.com/Pip-Value-Table to find out
$value per pip per lot for all major currency pairs
For standard lot
(100,000), multiply
values by 10
Profit By Going Long
Profit =
40 pips x $10 x 1 Std Lot = $400
Without leverage, you would have to invest USD 135,100 to earn USD 400 (0.29%
Return). Forex brokers allow you to leverage 1: 100 times.
Profit =
40 pips x $10 x 1 Std Lot = $400
Without leverage, you would have to utilise USD 135,600 to earn USD 400 (0.29%
Return) .
1:10 10%
1:20 5%
1:50 2%
1:100 1%
4 Kinds of Forex Traders
By Adam Khoo
adam@akltg.com
Copyright ©
Adam Khoo Learning Technologies Group Pte Ltd 2017