Profit, Losses, and Margins in FOREX

Table below allows you to see your profit or loss in dollars for various pip amounts and lot sizes. A micro-lot is 1,000 (1k) units; a mini-lot is 10,000 (10k) units; a standard lot is 100,000 (100k) units; a bank lot is 250,000 (250k) units. Some of these have been rounded off to make easier reading; they are close enough to serve the purpose for a quick in-trade status check.

[caption id="attachment_12966" align="aligncenter" width="561"]Profit and Loss (in Dollars) Profit and Loss (in Dollars)[/caption]

Margin per trade is the amount of dollars you must put into play to control a larger amount of a currency pair.

Margin is a bit of a misnomer in FOREX. If you open a trade on a 100,000 lot of EUR/USD and the broker requires $2,000 to accept the trade, your margin is $2,000. Brokers do set maximum margins. If you have multiple open positions, your margin is the sum total of all of them; this is your aggregate margin. See Table below.

[caption id="attachment_12967" align="aligncenter" width="903"]Margins Margins[/caption]

By Michael Duane Archer
Michael Duane Archer has been an active futures and FOREX trader for more than 35 years. He has worked in various advisory capacities, notably as a commodity trading advisor, registered SEC investment advisor, and branch manager for Heinold of Hawaii. He currently trades FOREX and futures and is involved in several technical analysis research projects.

Copyrighted 2016. Content published with author's permission.

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