Well now you know the BUY price and the SELL price? if you dont know please click here.
ok now its time to get in to the MARKET and will execute some trades.....are you ready??
Ex 1: Profitable buy trade.
ok now its time to get in to the MARKET and will execute some trades.....are you ready??
Ex 1: Profitable buy trade.
look at the above prices, lets assume that the USD is going to be weaker within another 3 hrs cause of a major news. then you will buy the EUR (meaning you will buy the pair) definitely at 1.3296 price, well things happened and the time is running.............after another 20 hrs the price runs to 1.3396 ,
well now you got a profit of 0.0100 (1.3396-1.3296), what is 0.0100 ???
Which is your profit and we are calling it as PIPS, well you have recieved 100 PIPS, from other hand if you recieved 0.0050, 0.0025, 0.0001 or 0.0000 figures then your profit would set as 50 pips,25 pips,1 pip and 0 pip respectively.
now we have to check the profit in real money, before you buy or sell a currency pair the broker will ask the investment amount...........read the below conversation.
BROKER : how may i help you sir?
CLIENT : I would like to buy EUR/USD at 1.3296
BROKER : Ok how much you are going to invest FOR A PIP sir?
CLIENT : I would like to invest 1$ for a pip.
BROKER : Well your trade has been executed and our spread is 3 PIPS sir.
CLIENT : Its ok thank you.
let us assume that the above client as you, and your profit would be 100$ (100 PIPS X 1$).
What is the spread?
The spread is the amount of pips between the bidding price and the asking price is called the spread. The spread is what forex brokers use to make money on every forex trade placed through their network. For example, the forex broker may be paying a price of 1.3600 for buying or selling. The broker will then allow you to buy the currency for 1.3601 or sell it for 1.3599. The spread always stays around the actual price that the forex broker is paying. So when you buy, you get one end of the spread and when you sell you get the other end of it, and vice versa. By the time you close your trade, you will have always paid the spread.
Ex 2 : Loosing buy trade.
look at the above prices, lets assume that the USD is going to be weaker within another 3 hrs cause of a major news. then you will buy the EUR definitely at 1.3296 price, well things happened and the time is running.............after another 20 hrs the price runs to 1.3196 ,
well now you got a loss of 0.0100 (1.3296-1.3196), what is 0.0100 ???
Which is your loss and you have lost 100PIPS.so if you invested 1$ for a pip, meaning that you have lost 100$.
I hope above two examples have given you a basic knowledge of profitable & loosing buy trades, if you need more help please make me a comment n im happy to help you. in our next post we are discussing about the profitable & loosing sell trades.
