August 30, 2017
You may ask yourself, “Why would I want to trade the FOREX?” The simple answer is leverage. Frankly, no market can provide you the leverage that the FOReign EXchange or FOREX can. You can effectively use $1000 to control $100,000. No secret formulas, no smoke and mirrors, and no Indian chants, just a sound application of technical analysis coupled with a logical money management strategy.
We can’t guarantee that every trade will be a winner and you wouldn’t believe us if we did, but we can say that consistently applying the right methodology can produce profits over the long haul. Leverage is a double-edged sword. Without proper risk management, this high degree of leverage can lead to large losses as well as gains.
Buying and Selling Currency Lots
To control 1 currency lot, the trader will need US $1,000 in margin. When the price of 1 lot moves 1 point, it makes approximately US $1,000. When it moves 2 points, it makes US$2,000. When it moves 5 points, it makes USD $5,000 and so on, all from the original amount of USD $1,000 invested.
1 point move is divided into PIPS. Like USD $1.00 has 100 pennies.
Currency Traders are trying to capture PIPS. 1 PIP is approximately equal to USD $10.
To get started trading, all you need is a minimum of $300.00 in a trading account.