Trading & Products

Forex Example

We will use the Euro versus the US Dollar, EURUSD, as an example of how to trade FX.

First determine the standard lot size for EURUSD. If you do not know what the standard lot size is you can look it up on our Market Information Sheets.

The standard lot size for EURUSD  is 100,000 EUR.

On standard accounts the minimum trade size is 0.10 lots. 
0.10 lots x 100,000 EUR = 10,000 EUR

In FX a pip is a unit used to measure a movement in price. One pip of EURUSD is 0.0001.

If you bought EURUSD with a lot size of 0.10 (10,000 EUR) you would have made 1 USD for every pip (0.0001) the price of EURUSD moved up because 10,000 x 0.0001 = 1 USD.

If you sold EURUSD with a lot size of 0.10 (10,000 EUR) you would have made 1 USD for every pip (0.0001) the price of EURUSD moved down because 10,000 x 0.0001 = 1 USD.

If you bought 0.1 lots of EURUSD at a price of 1.0800 and the price moved up 50 pips to 1.0850 you would have made a profit of 50 USD because 10.000 x 0.005 = 50 USD.

If you sold 0.1 lots of EURUSD at a price of 1.1000 and the price moved down 50 pips to 1.0950 you would have made a profit of 50 USD because 10.000 x 0.005 = 50 USD.

Alternatively if the prices in the examples moved in the opposite direction you would have lost the amounts stated.