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Learning Forex transactions examples

Demo transaction on the Forex market

Here we shall explain how to conduct a transaction on the Forex market and how to make a profit by trading instruments such as different currencies, CFD-s, futures, metals and indexes. The data below corresponds completely to real situations on the market, as if we were trading with real money on a real account. The corresponding charts have been taken from our trading terminal, which anybody can install to their computer free of charge. Let's get to it.

Selling the currency pair of EURUSD

Terms of trade

Deposit: 500 USD
Leverage: 1:100
Base currency: USD

At 10:00 terminal time (GMT) we decide to open a sell of the currency pair EURUSD. The volume of the transaction is 0,1 lots, the leverage is 1:100. The transaction is taking place at a price level of 1.3288. In order to earn from that transaction, the graph needs to go down, or to put it simply, the euro needs to lose value against the dollar.

We offer our clients leverage (the maximum leverage offered is 1:500). If we had conducted the transaction without leverage, the size of the collateral would have been 13288 USD! In this example we are using a leverage of 1:100, which means that in order to conduct a transaction of 0,1 lots, we need 100 times less collateral – 13288/100=132.88 USD.

The cost of one pip on a graph with 0,0001 accuracy is 1 USD.

  • Collateral: 132.88 USD
  • Pip value: 1 USD
In a few days the price dropped and reached a level of 1,2687. We decided to fix the profit! The euro lost 1,3288 – 1,2687 = 601 pips of its value against the dollar. The value of one pip was 1 USD.

Our profit was 1*601 = 601 USD.

Buying the CFD of McDonald's stock

Terms of trade

Deposit: 2000 USD
Leverage: 1:10
Base currency: USD

We decided to invest in McDonald's stock for a certain period of time (in this case the period is 1 year). Let's buy 100 stocks at a price level of 79.90. For this we use a leverage of 1:10. Without leverage our collateral would have been 79.90*100=7990USD. At a leverage of 1:10 our collateral is ten times smaller, 7990 / 10 = 799 USD.

During the year the price of the stock rose and we decided to sell with a profit. At the time the profit was fixed the price of one stock was 97.63

  • Buy: 79.90 USD
  • Sell: 97.65 USD

97.65 - 79.90 = 17.75 USD – our profit per one stock.
Now let's calculate the profit per 100 stocks: 17.75*100 = 1775 USD

Sell of Dow Jones index [DJI]

Terms of trade

Deposit: 300 USD
Leverage: 1:100
Base currency: USD

At 7:00 terminal time (GMT) we decided to open a transaction and sell the Dow Jones index at a volume of 0.1 lot and a leverage of 1:100. We're planning to hold the selling position for no more than 4-5 trading days. The price at which we conducted our transaction was 12164,37, the volume was 0,1 lots, the leverage was 1:100, so the collateral became 121.64 USD.

The price fluctuation of the index was quite big for a few days, but it had no definite direction! We decided to close the transaction and fix the profit.

  • Opening price: 12164.37
  • Closing price: 11920.41
Profit: 12164.37-11920.41= 243.96 USD

Buying gold [XAUUSD]

Terms of trade

Deposit: 1000 USD
Leverage: 1:100
Base currency: USD

From the year 2000 to 2012 the price of gold has risen constantly and has grown from 250 USD to 1900 USD. A growth of 760%. This particular instrument is one of the few, that showed noticable growth both before and during the economic crisis. This evokes confidence in investors.

Now let's see, how to buy gold. Having analysed what's happening on the market, we buy the precious metal for 0,2 lots at a price of 1594.67. Our collateral at a leverage of 1:100 is 318.93 USD.

In just a few days the price of gold rose noticeably and reached a level of 1624.01. We decided to fix the profit at that price.

  • Buying price: 1594.67
  • Selling price: 1624.01

Pip value: 0.20 USD (at 0,2 lots)
Profit: 1624.01 - 1594.67 = 29.34 * 0.20 * 100 = 586.8 USD