Spread – the difference between the best selling and buying prices. This difference will be indicated in the price field for the specified position that is being opened. Indicated in points
Cost will be Spread x point price. To see the spread for a specified asset, click here.
Manual transaction closing If you need to close order, just click Close in this transaction.
Using leverage is a kind of acceleration for your transaction. Leverage significantly expands market opportunities, even if you are making transaction with a small amount of personal funds. CFD / Forex leverage allows you to perform big transactions, even if your deposit is small.
The advantage of using leverage is that it reduces the risk of losing your personal funds, whereas the amount of potential income increases. Leverage can give impressive profits, but the risk of losing significant amount of funds also exists.
When trading on the TwiceFX platform, leverage can be selected for both order and asset. Here you can find more information regarding leverage amount.
You can set up a fixed amount of capital in your Personal Account. This is called the mandatory margin or safe amount. The calculations to estimate the risks discussed above, as well as attempts to increase the margin may be the reason that the transaction closing will occur before the estimated time. Thus, there will be not enough money on the trading account to maintain the difference, as a result, there will be no profit. TwiceFX Margin represents financial assets that are indicated before creation of a specific position.
The factors due to which the broker is forced to close the transaction are called Margin Coll. This happens when the amount on the current account, required to support all transactions that are currently active, approaches zero. As a rule, Margin Call happens when the balance on the account is 20-30% of the original amount
Is it risky to use leverage while trading?
When leverage is used, only a small amount of personal funds is involved in the transaction, but the amount of profit or loss will depend on the position’s initial value. Thus, the amount of profit can exceed the amount of the investment in many times. However one should not forget that the use of leverage is not only an opportunity to significantly increase one’s profit, but also opportunity to have losses. Below you will find current information, which can be the maximum profit and maximum loss for each position.
The calculation of profit and loss for Forex trading is carried out using following formulas:
The most important element in calculation is the value of a point. Before creating a new position, you will be redirected to a special application that will perform the required calculations.
Used formulas to calculate item cost:
– without JPY = (investment amount x leverage) / opening price / 10,000
– if JPY is one of pair currencies = (investment amount х leverage)/ opening price/ 10,000
– for stock and raw = (investment amount х leverage) / starting price / 100
Trader will make profit in the currency selected as the basis currency for his account. Profit and loss method = (number of points x their price) – spread commission = swap commission
It is possible to set certain conditions if they come, orders will be opened (the achievement of a given price). The use of pending transactions will be convenient when there is no time to track the course movement, but it is assumed that very soon there will be an offer that will correspond to the set price:
• purchase at a specified price that differs from the current one (Buy Pending);
• sale at a specified price that differs from the current one (Sell Pending).
The trader himself sets the price parameters for each specific offer (estimated purchase price).
Trader will be able to make profit if he calculates correctly the value of a pending order.
You can set uo or make changes to your profit price at the beginning or throughout time during which your positions will be valid. It is also necessary to remember, that there is a limit for the price difference when an order is opened, as well as for cost, considering profit.
To be more detailed, let look at the example:
The EUR / USD transaction sale is opened, at a price of 1.1208. Investment size – 100 Euro. The fixed profit was set automatically to 1.118, and the point is 3.5688 When the price approaches the upper border, the profit will be 100 euros (3.5688 x 28 points ≈ 100 Euro).
In case if the level of profit will be reduced to 1.11, the estimated profit will be 385.4 euros (3.5688 x 108).
When managing a portfolio there is a method that will help to limit the level of loss. It is called “stop loss”. It is a kind of order for closing a position (selling securities) if the price has started to move in an unfavorable direction
The stop loss price level can be changed as many times as you need until the position becomes active. Before creating your order, it is recommended to check which level is stop loss. If you will change its value, the investment margin may change as well, but it is impossible to change the price of point. By clicking here, you can find out what the maximum loss ratio for each asset can be. To be more detailed, let look at the example: A EUR / USD sell order is created in 1.1208 of 100 euros. The point will cost 3.5688 EUR, the stop loss will be automatically set to 1.1236. Thus, the loss will be only 100 euro if the purchase price reaches the quotation (3.5688 х28 punt ≈ 100 EUR), i.e. only the money that was invested in this order. In case of raising the stop loss by 1.1250, the risk for this position will increase up to 150 euros (3.5688 x 42). Accordingly, the amount of investment will also increase to 150 euros.
A small amount, which is calculated from the profit or loss of a particular order opened for all night, is called swap. The swap is calculated according to the following formula: investment amount x leverage x percent swap / 365 days.
It is the difference between the best prices for buy/sale. The difference is displayed in the price field of the position that opens. Will be expressed in points. The cost of the trade transaction will be spread x price of point.
The calculation of profit and loss during Forex trading is carried out using these formulas:
The most important element in the calculation of profits and losses is the cost of pont. Before creating a new order, trader gets into a special application that will make the required calculations.
Used formulas to calculate the price of point:
– without JPY = (amount of investment x leverage) / opening price / 10,000
– if JPY is one of the currencies in the currency pair = (investment volume x leverage) / opening price / 10,000
– for stocks and raw = (investment x leverage) / starting price / 100
The trader will receive profits in the currency that is selected as the basic for a particular trading account.
Profit and loss method = (number of points x their price) – spread commission = swap commission
It is possible to set certain conditions if they come orders will be created (the achievement of a given price). This is very convenient when there is no time to track the course movement, but it is expected that an offer will appear very soon, which will correspond to the set price:
• buy position at a specific price that differs from the current one (Buy Pending);
• sell position at a specific price that differs from the current one (Sell Pending).
Trader sets himself the price parameters for each individual transaction.
Spread – shows the difference between the best prices for sale (bid) and purchase (ask). The difference is displayed in the price field of the order that opens. Spread is shown in points.
The cost of the trading transaction will be the spread x price of point. To be able to see the spread on a specific asset, click here.
Basic Assets Types
When trading in the Forex market, assets of such types are considered to be basic: for example, Google, British Airways – stocks; Gold, Brent Crude –raw; NASDAQ, FTSE 100 – indexes.