Here’s a typical scenario of trade:
Suppose that the current offer / request a quote for the EUR / USD 1.3802/05 and you want to have a long (or buying) because you think the euro will have on the dollar.
We’ll also assume that you are only purchasing 1 standard lot.
When you buy a pair, you are actually buying 100,000 Euros to U.S. $ 138,050 dollars. Using 100:1 leverage, you should have an initial margin deposit of $ 1381 for this activity to be undertaken.
Suppose then that the euro made gains in the dollar and trades 1.3865/68 hours and you decide to sell and make profits. You may sell 1 lot standard with a profit of 60 pips (1,3865-1,3805).
When you sell this pair, is Sale 100.000 € for U.S. $ 138,650 dollars. Since the purchase of 100,000 euros for $ 138,050 and sold for $ 138,650, which received an allowance of $ 600.
If on the other hand, the euro fell to 1.3775/78 and sold at 1.3775, there would be a loss of 30 pips, or $ 300. ($ 138,050 – $ 137,750).
Using the margin and leverage, it is imperative that you employ the standards of risk management to ensure that never in your account equity falls below margin requirements – if you do, your position will be liquidated and automatically maintain a significant loss.
