ForexMaster functions and terms
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This document provides an overview of key forex trading concepts including currency pairs, buying and selling currencies, account components like profit/loss and cash value, using leverage through margin trading, calculating profit/loss on trades, commission fees, and performance metrics. It explains that currencies are always traded in pairs, buying a currency means you are interacting with the base currency, and selling is the opposite. It also defines important terms and provides examples of calculating P&L on trades.
![Buying & selling
2: Trade by buying (longing) or selling (shorting)
SELLING is the opposite: trading in your USD (selling) to get JPY
(buying)
USD JPY
[ Tip! ] The easiest way to remember: you are always interacting
with the base.
$USDJPY 119.23](https://image.slidesharecdn.com/forexmasterfunctionsandterms-150203053457-conversion-gate01/85/ForexMaster-functions-and-terms-4-320.jpg)
![Account
[ Tip! ]: Get familiar with the terms & interface!](https://image.slidesharecdn.com/forexmasterfunctionsandterms-150203053457-conversion-gate01/85/ForexMaster-functions-and-terms-5-320.jpg)
![Margin/leverage
3: Use margin to control a larger positions
What’s ‘Margin trading’?
• Borrowing money from your broker (ForexMaster, in this
case) to increase potential profits.
• Use it to control a larger position than the amount you’d
otherwise be able to control with your own invested capital.
HOW IT WORKS:
Link 1
Link 2
[ Tip! ]: The ForexMaster ratio is 40:1](https://image.slidesharecdn.com/forexmasterfunctionsandterms-150203053457-conversion-gate01/85/ForexMaster-functions-and-terms-7-320.jpg)
ForexMaster functions and terms
- 1. Forex Trading 101: Forex Functions and ForexMaster terms explained
- 2. Currency pairs $USDJPY 119.23 Base Quote 1: All currencies come in pairs • This means that US $1 = 119.23 JPY • I.e. US $1 can buy 119.23 JPY at this exact time Price $EURUSD 1.1944 • 1 EUR can buy US $1.1944 at this exact time.
- 3. Buying & selling 2: Trade by buying (longing) or selling (shorting) When you BUY, you are trading the quote to buy the base. JPY USD EX: If you buy USDJPY, you are in effect trading in your JPY (selling) to get USD (buying) $USDJPY 119.23
- 4. Buying & selling 2: Trade by buying (longing) or selling (shorting) SELLING is the opposite: trading in your USD (selling) to get JPY (buying) USD JPY [ Tip! ] The easiest way to remember: you are always interacting with the base. $USDJPY 119.23
- 5. Account [ Tip! ]: Get familiar with the terms & interface!
- 6. Account Daily P&L Realized P&L + Unrealized P&L Realized P&L P&L made after closing position(s) Unrealized P&L P&L still tied to open position(s) Account Value Cash Value + Daily P&L (Profits & Losses) Cash Value Amount of funds available for trading Margin Value 40x your initial Account Value
- 7. Margin/leverage 3: Use margin to control a larger positions What’s ‘Margin trading’? • Borrowing money from your broker (ForexMaster, in this case) to increase potential profits. • Use it to control a larger position than the amount you’d otherwise be able to control with your own invested capital. HOW IT WORKS: Link 1 Link 2 [ Tip! ]: The ForexMaster ratio is 40:1
- 8. Calculating P&L After a few days, the new quote price is 1.17670. (This is bad for you, because you shorted and want the price to drop.) But since you shorted, 355USD represents the amount of money LOST. (Had the point difference X quantity traded been a negative number, then you would have profited.) Example 1 Let’s say you short 100K of EURUSD @ 1.17325… 1.17670 (current price) - 1.17325 (initial short price) = 0.00355 0.00355 x 100K (quantity initially sold) = 355USD.
- 9. Calculating P&L After a few days, the new quote price is 119.30. *REMEMBER: All amounts calculated have to be in USD, because that’s what your account value is calculated in. If USD is the base currency, then you’ll have to convert your profit (which is in quote currency) back to USD. Example 2 Let’s say you long 400K of USDJPY @ 119.00… 119.30 (current price) - 119.00 (initial long price) = 0.30. 0.30 X 400K (quantity initially bought) = 120,000JPY. 120,000JPY / 119.30 (quote price when you closed) = 1005.87USD. This is your profit.
- 10. Commission fees 4: Take note of commission fees on trades • We start out with 100K Account Value. We buy 100K of USDJPY at 120.00. • You’ll notice immediately that your cash value decreases by $2, maybe $3. This is the commission fee.
- 11. Commission fees 4: Take note of commission fees on trades 0. 00002 X (Quote Price X Quantity Traded) • If USD is the quote currency (e.g. EURUSD), then you’re done calculating. EX: We buy 100K of EURUSD at 1.2000. .00002 X (1.2000 X 100,000) = 2.4 = $2 commission fee. • If USD is NOT the quote currency (e.g. USDJPY), divide by the pair’s quote price. EX: We buy 500,000 of USDJPY at 100.00. .00002 X (100.00 X 500,000) = 1,000 1,000 / 100.00 (USDJPY quote price) = $10 commission fee 100K of USDJPY at 120.00…
- 12. Performance # All Time Top %: # Percentile of all ForexMaster users. I.e. If your number says 28, then you are in the 28th percentile of all ForexMaster users. Account Value is updated in real time. Win Ratio How many trades won vs. lost. Performance shows yesterday’s stats Total P&L Realized P&L from yesterday 10PM GMT ROI(%) Realized P&L + Unrealized P&L from yesterday 10PM GMT