InstaForex Education

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Task №6 part 1. Techniques of making trades in Forex

In this class, you are to practice the knowledge gained in the previous sections. We are going to make trades and at the same time take notice of helpful information available in the trading platform, how the information changes reflecting price fluctuations etc.
The class allows you to absorb the knowledge and certainly find out something new.
We hope you have followed our instructions: studied carefully the manual of the MetaTrader platform and opened a demo account. So you will not find it difficult to perform activities suggested in this tutorial.

Let’s get started. First, you should open the MetaTrader platform and activate a demo account. Let’s say we deposited $5,000 when we registered the demo account. This amount is displayed in the Balance line in the Trade tab.

You have already learned that trading in Forex means basically making deals. In other words, a trader opens and then closes positions, which could be long (buy orders) and short (sell orders). To open a position, a trader has to ask a broker for a market quote.


In the Profit line, we can see the figure of -9. It means that we have opened a position with a negative result. We have opened a sell order at the bid price of 1.4471, the reverse order can be made at the ask price of 1.4480. The amount will change following price fluctuations in the market and will depend on the ask price at the current moment.
As this trade is the only one we have opened so far, the same amount is displayed also in the line Total profit/loss. A bit later, we are going to tell you in detail how this parameter is calculated if open trades bring some results.
The Equity line has logged some changes. The original amount of 5,000 decreased to 4,991. This figure was calculated foreseeing possible losses expressed as floating results of unrealized profit/loss and allowing for a commission. Thus,

5,000-9=4,991

In the Margin line, we see the figure of 144.71. It means that to cover an open position of 1 lot, the amount of 1 lot equals €10,000 as we opened a position on the EUR/USD pair, thus the euro is a base currency. From the previous tutorials, you know that 1 lot equals 10,000 with InstaForex. On condition that leverage is 1:100, we should use the required amount dividing 10,000 into 100 that is €100. Besides, to calculate the margin we should mind the currency of the account. As we opened the account in US dollars, we should convert €100 into US dollars. Bid = 1.4471, thus

€100 = 100 * 1.4471 = $144.71

Free margin is assessed factoring in the equity amount. To open additional positions, you have $4,846.29 at your disposal. This amount is reckoned increasing or decreasing the balance by amount of the total profit and deducting the equity amount.

5,000-0-144,71=4,846.29

Now, we can assess how many positions equal to 10,000 units can be added to the opened position on the EUR/USD pair.

4,846.29/144,71≈33

In practice, you can open 33 more positions. In other words, you can sell €330,000 or carry out sell or buy trades of a size no more than 30,000 units on another currency pair.

After a while, let’s close an open position. It can be done in two ways.

  • You may request a quote again and click the Buy button in the pop-up window. Importantly, you should be extremely careful asking for a quote. Make sure you request a quote exactly on the EUR/USD pair. Besides, take note of the amount, which is to be used for executing the reverse trade. This amount should be the same size as the size position was opened at.
  • You can close the position by the direct order clicking the Close button. In this case, the trading platform will determine on its own which deal has to be executed (buy or sell) as well as a size of the reverse trade.

We opened the short position, which was closed later at the moment when the euro was trading at 1,4485-1,4488. Accordingly, the reverse deal was executed at the ask price, namely 1,4488.

Once again, let’s follow the changes that were unfolding inside the MetaTrader platform

In the Balance table, we are going to see the following changes.

In the Profit/loss line, we see the figure 0. It means that the amount was revised after the deal had been completed.

+€100,000 +$14,471
-€100,000 -$14,488
0 -$17

In the Balance line we see the amount of 4,983 which has been formed as a result of summing up the final value and balance, excluding a loss and swap.
The principles of charging swaps on buy/sell orders will be discussed in the next class.

In the Order line, we do not notice any record. It means that no positions have been opened so far. In the Trade table, one more line has been filled.

In the Account History section, we can find out full details of executed deals, in particular an order number, opening position time, closing position time, order type, opening price, closing price, swap, and total profit.

Now, we are completing the first part of class 6. In the second part, you are going to get more insights about methods of executing trades in the currency market. You will learn how to put pending and stop-limit orders and get to know the specifics of extending a position overnight or a rollover.

Questions for revision
  1. Specify the series of operations when you open a short position on the USD/JPY pair.
  2. Open a long position on the GBP/USD pair. Describe changes in the Detailed balance window. Explain reasons for these changes.
  3. Close the position on the GBP/USD pair opened earlier. Describe changes in the following fields such as Detailed balance, Positions, and Trades.
  4. State numbers of executed trades and numbers of orders.
  5. Draw a balance scheme for the executed trade.

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