Forex Trading F.A.Q

Here are some FAQ'S what is day trading? What is going short? How do I calculate P/L? How much capital is needed to start? Can I trade from home? What are the trading hours? Do I hold a position overnight? What size positions should I trade? Do I need special trading software? We will answer some of those questions now and some will be discussed in the other sections. We can't answer every question about Forex trading or day trading but I hope by the end of your reading you have a better understanding of day trading. I also encourage you to do your own research.

So what is day trading?

Day trading refers to the practice of buying and selling financial instruments within the same trading day such that all positions are closed before the market close for the trading day. Traders that participate in day trading are called active traders or day traders.

What is going short?

Simply put we open a position by selling the underlying security at a price and after some time has expired we close the position by buying it back at a lower price and we make a profit from the difference between the two prices. Here is an Example of short position. You could sell .1(10k) of EUR/USD at 1.2050 and as the market pulls back the price drops. Now you place an order to buy .1(10k) at 1.2000 as the market continues to fall your order gets filled. 1.2050(sell) minus (buy) 1.2000 = .50 pips Or $50 profit.

How do I calculate P/L?

Take a closer look at a long position. You buy .1 (10k of Euros) at 1.2000 it will cost you S12,000.00 dollars(10k x 1.2000) but your leverage is 1% so your initial margin deposit would be approximately $ 120.00. Now the Euro price increases and you want to take some profits so you sell .1 (10k) Euros at 1.2100 and receive $12,100.00 for a profit of $100.00. 1.2100 - 1.2000 = .100 pips or $12,100.00 - $12,000.00 = $100 dollars.

How much capital is needed to start?

Most Forex brokers account minimum is $250 to $5000 and it depends on the broker.

Can I trade for home?

Yes, we call that trading remotely. The broker will send you a link to download the software to your computer.

What are the Trading Hours

Forex market is open 24 hours a day from Sunday to Friday. Opens at 5:00pm EST Sunday night and closes at 5:00 pm EST on Friday. *Excluding Holidays.

Do I hold a position overnight?

Day traders usually close all positions before the end of the session. If a Forex position is going to be held overnight it is subject to rollover.

What Trading position size should I use

As a new trader you should always start with the smallest size.For a Micro account the smallest position is 1k or (.01 Lot) and for a standard account it is 10K or (1 Lot) position. Remember since trading has a very high degree of risk use the smallest position size first and when your trading skill improve so can your position size.

Do I need special trading software?

No,We provide a link to download a VERY powerfull software called the MT4 Trading platform.

*Hot Tip