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Forex Trading Examples

Total Customer Margin Balance XAU/USD Current Price Leverage Ratio
30.000$ 1890$ 10

Direction of position to be taken in XAU/USD parity by an investor waiting for a movement in favour of XAU (in disfavour of USD) will be LONG.

 

The investor buys 1 lot, or 100 ounces of gold, and opens an upside position equal to position size of $189,000.

 

10% of the position size taken will be used from the balance in the accountin this transaction beacuse leverage ratio of 1:10

 

Collateral Reserved= $189.000 / 10 = $18.900

 

If gold rises to $1900, the equivalent of 100 ounces of gold will rise to $190,000, and the investor will gain 100$ gross profit as a result of this upward movement

 

If gold falls to 1880$ the equivalent of 100 ounces of gold will fall to 188,000 and the investor will lose 100$ gross loss as a result of this downward movement

 

In case of loss, when the predetermined margin completion rate is reached, the investor is informed about the margin call.

 

In case of loss process continues and the investor does not deposit additional collateral or close or reduce his position after the margin call, When the loss process continues until the predetermined position closing rate is reached. the system automatically closes all open positions of the customer at the market price and cancels all pending orders.

Total Customer Margin Balance EUR/USD Current Price Leverage Ratio
20,000$ 1,1600 10

Direction of position to be taken in EUR/USD parity by an investor waiting for a movement in favour of EURO (in disfavour of USD) will be SHORT.

 

Hence, investor opens a downward position in EUR/USD parity by buying USD 116,000 against a sale of EUR 100,000. Given that 1:10 leverage ratio is used in this trade, a margin equal to 10% of the size of the position taken as above will be used from the investor’s account balance.

 

Used Margin = €100.000 / 10 = €10.000=€10.000*1,16= 11.600 USD

 

If EUR/USD parity falls to 1.1400 (200 pip decrease), the price of EUR 100,000 will decrease to USD 114,000, and the investor will make a profit of USD 2,000.

 

If EUR/USD parity rises to 1.1800 (200 pip increase), the price of EUR 100,000 will increase to USD 118,000, and the investor will incur a loss of USD 2,000.

 

In the case of loss, when the pre-determined margin completion rate is reached, a margin call is sent to investor for information purposes.

 

If the loss process continues and upon a margin call, investor fails to deposit an additional margin or to close his position or to reduce his position, then, loss process continues until the predetermined position closing (Stop Out) rate is reached.

 

When this rate is reached, the system automatically closes at the then-current market price all open positions of customer, and cancels all standing orders of customer.

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