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| FOREX BASICS |
| ✓ FOREX HISTORY |
✓ FOREX TRADING CONCEPT |
✓ TYPE OF ORDERS |
| ✓ CONTRACT SIZE |
✓ MARGIN AND LEVERAGE |
✓ ROLLOVER |
| ✓ FOREX GLOSSARY |
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MARGIN AND LEVERAGE
Leverage is the use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment.
Some seasoned currency trader harness leverage effectively in currency trading. They apply small leverage to test the market sentiment. Once the strategy works with small position size and leverage, they then multiply leverage quickly to maximize profit potentials.
How It Works
For example: EUR/USD is trading at 1.2000/1.2003. When it says "buying or selling 1 standard lot (contract) of this currency pair". You are buying or selling 100,000 units of Euro against the US dollar. If you choose buy, it will cost you 100,000 Euro x 1.2003 US dollar/Euro = USD 120,030. It doesn't make retail Forex appealing to orindary investors. In order to overcome that, Forex dealers allow trader to take a position with margin or leverage applied. If you choose 100:1 leverage or 1% of the required amount, the cost of doing that trade is now USD 120,030 / 100 = USD 1,200.30. This method made retail Forex trading popular than ever.
Risk Warning
Leverage essentially amplifies your potential losses or gains. In order to make traders aware of its downside and prevent Forex dealers to intentially downplay risks associated with margin trading, regulars now require Forex dealers to add disclaimers within close proximity of its "leverage claim" such as "WITHOUT PROPER USE OF RISK MANAGEMENT, THE HIGH DEGREE OF LEVERAGE CAN LEAD TO LARGE LOSSSES AS WELL AS GAINS."
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| ECONOMIC CALENDARS |
| DATE |
TIME |
COUNTRY |
EVENT |
FORECAST |
PREVIOUS |
| 07/21/08 |
3:15am |
Switzerland |
PPI m/m |
0.4% |
1.2% |
| 07/21/08 |
4:45am |
United Kingdom |
BOE Governor King Speaks |
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|
|
8:30am |
Canada |
Core Retail Sales m/m |
0.8% |
1.1% |
|
9:30pm |
Australia |
CPI q/q |
1.2 |
1.3% |
| 07/23/08 |
4:30am |
United Kingdom |
MPC Meeting Minutes |
8-1 hld |
8-1 hld |
|
7:00am |
Canada |
Core CPI m/m |
0.2% |
0.3% |
|
5:00pm |
New Zealand |
Monetary Policy Statement |
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|
|
5:00pm |
New Zealand |
Official Cash Rate |
8.25% |
8.25% |
| 07/24/08 |
4:00am |
Eurozone |
German Ifo Business Climate Index |
100.2 |
101.3 |
|
4:30am |
United Kingdom |
Retail Sales m/m |
-2.5% |
3.5% |
|
10:00am |
United States |
Existing Home Sales |
4.93M |
4.99M |
| 07/25/08 |
4:30am |
United Kingdom |
Prelim GDP q/q |
0.2% |
0.3% |
|
8:30am |
United States |
Core Durable Goods Orders m/m |
-0.2% |
-0.9% |
|
10:00am |
United States |
New Home Sales |
508K |
512K |
| LATEST MARKET UPDATES |
CURRENCY OUTLOOK |
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