The currency pair
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The currency pair

For example, the EUR / USD is 1.2505 / 1.2509. You have to analyze the market and determined that the value of EUR / USD is moving higher (at least to 1.2600). You can buy 0.1 lot (minimum value of the contract) of the EUR / USD at 1.2509 (ask price). Table 2 can help you to determine the value of the contract: For example, if 1.0 lot of EUR / USD is 100,000 EUR, then 0.1 lot (contract size) of € 10,000.

This means that you buy 10,000 EUR and sell 10,000 × 1.2509 = $ 12,509. To do this transaction, you do not have to pay $ 12,509, but 100 times lower, at only $ 125.09. The remainder of the money (in our example, $ 12,383.91) is leveraged to you by a broker (a company that will help you trade in the market).

Leverage is the ratio between the collateral and borrowed funds: 1:20, 1:40, 1:50, 1:100. 1:100 leverage means, you have to deposit 100 times lower than the value of the contract, if you want to do a transaction.

So when you speculate that the EUR / USD is moving higher, you buy 10,000 EUR and sell 12,509 USD. We assume that you are just speculation and EUR / USD reached a value of 1.2599 / 1.2603. You close the open position with the opposite transaction (for example, you close the short position (sell position) with a long position (buy position), it means you sell € 10,000 (0.1 * 1.0 lot lot for EUR / USD) and buy 12,599 USD):

A pip is the minimum value of the price fluctuations. For EUR / USD, 1 pip is 0.0001 of the price. Our profit is 1.2599 - 1.2509 = 0.0090, which is 90 pips.

Thus, you have deposited $ 125 and profiting $ 90. What is the time required to move 90 pips in EUR / USD? According to the history of trade, it can happen in 10 minutes to several days. Thus, when a deposit of $ 125, then within a few hours will get $ 90. Such revenue is remarkable. However, you should be aware that this can also bring disadvantages. Therefore, management will help you to minimize the risk of loss, and even reduce them to zero, and increase your profits from 10%, 20% to 30% and even higher each month.