<span style=”color: rgb(0, 0, 0);”>What Is</span> Forex <span style=”color: rgb(0, 0, 0);”>Trading ?</span>

<div style=”text-align: justify;”><p><a href=”https://climaxprime.com/”>Forex</a> is an abbreviation for <a href=”https://www.forexpeacearmy.com/forex-reviews/19327/climaxprime-forex-brokers”>foreign exchange</a>; it refers to the process of exchanging one currency for another for a number of purposes, most often trade, business, or tourism. Currency prices fluctuate constantly, which means that 1 US dollar today may be worthless in your local currency than it was yesterday or even tomorrow. This is the point at which fluctuating currency rates may result in profit or loss.</p><h6><strong>Consider the following example to better understand how forex traders benefit from currency exchange rate fluctuations:</strong></h6><p>Assume an individual visits a currency exchange to exchange USD 100,000 for euros. If the currency rate (USD/EUR) is 0.84000 at the moment, they now have EUR 84 000. After a few days, the exchange rate has fallen to 0.80000. They now get USD 105 000 after converting the euros into US dollars. As a result, this individual profited USD 5000 on this purchase.</p></div>

<p>When it comes to currency pairs, they are described as the currencies of two different pairs that are joined together for trading purposes in the foreign exchange market. Such as EURUSD, GBPJPY, NZDCAD, and other currency pairings are examples of currency pairs.</p><p>A cross pair is a currency pair that does not include the United States dollar.The first currency in a currency pair is referred to as the “base currency,” while the second currency in a currency pair is referred to as the “quote currency.”</p>

<p>When it comes to currency pairs, they are described as the currencies of two different pairs that are joined together for trading purposes in the foreign exchange market. Such as EURUSD, GBPJPY, NZDCAD, and other currency pairings are examples of currency pairs.</p><p>A cross pair is a currency pair that does not include the United States dollar.The first currency in a currency pair is referred to as the “base currency,” while the second currency in a currency pair is referred to as the “quote currency.”</p>

<p>The Bid Price is the price at which a broker is willing to purchase the currency pair’s first named (base) currency from a Client. Following that, it is the price at which clients sell the currency pair’s first named (base) currency. The ask price is the price at which a broker is prepared to sell a customer the currency pair’s first named (base) currency. Subsequently, it is the price at which the client purchases the currency pair’s first designated (base) currency.</p><p><strong>Buy</strong> orders begin at the Ask Price and end at the Bid Price.</p><p><strong>Sell</strong> orders begin at the Bid Price and terminate at the Ask Price.</p>

<p>Spread is the difference between the Bid and Ask prices of a specific trading instrument, and it is also the primary source of profit for market maker brokers in the financial markets today. The value of the spread is specified in points (pips). In Climax Prime we offer the lowest floating Spreads.<br></p>

<p>A lot is the usual unit of measurement for a transaction. Typically, one standard lot is equivalent to 100 000 units of the base currency, which is the most common measurement. The contract size is a set number that represents the amount of base money included in one lot. For the vast majority of forex products, this figure is set at $100,000.</p>

<p>The ratio of equity to loan capital is referred to as leverage. It has a direct effect on the amount of margin required to trade the instrument on which it is based. The majority of trading instruments are available for up to 1:500 leverage for Cent, 1:300 for Standard and 1:200 for ECN accounts. The amount of money in account currency withheld by a broker in exchange for keeping an order open is referred to as margin. The greater the amount of leverage, the lower the margin. Margin always calculates based on the <strong>base currency</strong> with the formula below;</p><p><strong>Lot x Contract size / Leverage</strong></p><p><strong>Example:</strong></p><p>The client traded on <strong>1</strong> lot <strong>EURUSD</strong> on a Standard account, how much margin is required to open this account? (EURUSD: 1.18297)</p><p>Lot x Contract Size / Leverage<br />1 x 100000 / 300 = 333.33 <strong>EUR</strong> x 1.18297 = 394.31 <strong>USD</strong></p><p><strong>Balance/Equity/Free Margin</strong></p><p>The entire financial outcome of all completed transactions and depositing/withdrawing activities on a particular account is known as the balance. It is either the amount of money you have available before you open any orders or the amount of cash remaining after all open orders have been closed. While orders are being processed, the account’s balance remains unchanged. When you place an order, your balance is combined with the profit or loss made by the order to determine your equity. Equity is equal to the sum of the balance plus or minus profit or loss. Margin is a portion of the money kept in reserve after an order is opened, as you are well aware. Free Margin is the term used to describe leftover money.</p><p><strong>Equity = Free Margin + Margin</strong></p>

<p>In the Forex market, the difference between the closing and opening prices of an order is being used to determine the profit or loss of the transaction.</p><p><strong>Profit / Loss = ( Opening Price – Closing Price ) x Lot x Contract size</strong></p><p>Profit or Loss always calculate based on the <strong>quote currency</strong>. Assume Client traded on 1 Lot USDCAD, the Profit or loss calculate based on <strong>CAD</strong> and then need to be converted to USD.</p><p><strong>Margin level/Margin Call/Stop out</strong></p><p>The margin level is the percentage ratio of equity to margin.</p><p><strong>Margin level = (Equity / Margin) x 100%</strong></p><p>The margin call is a trading terminal notice indicating that it is required to deposit or cancel a few positions in order to prevent Stop Out. This notice is issued when the Margin Level reaches the Margin Call level established by the broker for that specific account. Stop out is the process by which trades are automatically closed when the Margin Level reaches the Stop Out level established by the broker for the account.</p>