Forex Trading Overview

MetaTrader 5 Features

MetaTrader 5 provides robust tools for tracking open positions, calculating profit/loss, and managing account equity. It offers full back-office functionality, allowing traders to monitor account metrics effectively. Despite the automation, understanding manual calculations ensures better decision-making and risk management.

Major Currency Pairs

Popular pairs include:

TermDefinition
EUR/USDEuro vs. US Dollar
GBP/USDUK Pound vs. US Dollar
USD/JPYUS Dollar vs. Japanese Yen
USD/CHFUS Dollar vs. Swiss Franc
USD/CADUS Dollar vs. Canadian Dollar
AUD/USDAustralian Dollar vs. US Dollar

These pairs dominate trading due to their high liquidity and narrow spreads.

Currency Mechanics

Base Currency : The first currency in a pair; determines the trade size.

Quote Currency : The second currency; used for profit/loss calculations.

Example : n EUR/USD, EUR is the base currency, and USD is the quote.

Margin and Leverage Requirements

Margin : A minimum of $1,000 is required for 1 standard lot (100,000 units), corresponding to 1% of trade size.

Leverage : Allows traders to control large positions with minimal capital, often 1:100.

Profit/Loss Examples

EUR/USD Trade:

Buy 5 lots at 1.3450 → Sell at 1.3490 = $2,000 profit.

Calculation: ( 1.3490 − 1.3450 ) × 5 × 100 ,

000 (1.3490−1.3450)×5×100,000.

USD/CHF Trade:

Sell 3 lots at 0.8982 → Buy at 0.8924 = CHF 1,740 profit.

Converted to USD:

Profit in CHF ÷ Close Price

This structured approach ensures clarity in trade planning and evaluation.

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