# How to calculate the margin and profit and loss amount in forex trading

Forex trading involves a lot of calculations, understanding the calculation process helps traders to more fully control the r forexcashbackeasy00%cashbackforexex cashback easyk Many beginners pay too much attention to technical analysis, ignoring the calculation of the margin and profit and loss amount, and simply look at the calculation results that come with MT4, which is not a good trading habit. For example, we need to trade the EURUSD cashbackforexpip pair, we have $1W in our account, we have set a stop loss of 10 pips, so what is the maximum number of lots we can place? If you are not familiar with the calculation of the margin, you can not do a number, naturally do not do a good risk control 1, the foreign exchange market a single transaction on behalf of 10W cashback forex currency each currency pair there are two currencies, the front is the base currency, the back is the denomination of the currency, such as the USDJPY, USD is the base currency, JPY for the denomination of the currency if the USD in front, it is the reverse Currency (the full text of the USDJPY representative); if the USD in the back, the positive currency (the full text of the EURUSD representative) foreign exchange market regulations, the total value of a single lot of trading orders for 100, cashbackforex base currency, where the base currency is the currency pair in front of the currency Many traders are used to saying that a single lot of trading orders for 100,000 U.S. dollars, which is a very obvious error for the USDJPY, USDCAD USDCHF, USDJPY, USDCHF, is indeed 100,000 U.S. dollars; but for EURUSD, GBPUSD, AUDUSD, a single trade order for 100,000 euros, 100,000 pounds, 100,000 Australian dollars, respectively, as we all know, the foreign exchange market can not only under a standard lot single, or under 0.1 (mini lot), 0.01 (micro lot) lot single, which is not other markets have the function When the amount of orders for 0.1 hand, the total value of the contract for 10,000 base currency, note that here is the base currency, not the U.S. dollar when the amount of orders for 0.01 hand, the total value of the contract for 1,000 base currency other values of the order, according to the simple multiplication and division operation can be obtained 2, the margin exists floating and fixed two models floating margin model is the most mainstream, while it is also the most scientific Calculation method to 200 times leverage, for example, in trading USDJPY, if the order volume for 1 standard lot, then 100,000 base currency (here for the U.S. dollar) divided by 200 (here for the leverage), to get the total amount of occupied margin for 500 base currency (here for the U.S. dollar) the same 200 times leverage, if the trading species for EURUSD, the order volume for 1 standard lot, then to 100,000 base Currency (here is the euro) divided by 200 (here is the leverage), to get the total amount of occupied margin for 500 base currency (here is the euro) calculation is not over here, to know that our MT4 account funds for the U.S. dollar, so also need to convert 500 euros into U.S. dollars assume that the current EURUSD exchange rate of 1.2, the calculation method for the total amount of euro margin 500 multiplied by the current In addition to floating margin, there is also a non-mainstream fixed margin model. As the name suggests, the amount of fixed margin is maintained over a period of time. Take the list of fixed margin can be compared with their own 3, the basis for calculating the profit and loss of the transaction is to understand the point value point value is the value of each foreign exchange each fluctuation of a standard point foreign exchange market customary not to use the percentage to calculate profit and loss, the alternative means is to calculate the total number of points of the market fluctuations such as the currency pair EURUSD, the exchange rate from 1.2000 up to 1.2001 (or down to 1.1999), it fluctuates by one standard point So how is the value of one standard point calculated? This involves the 100,000 base currency concept mentioned earlier EURUSDs base currency is the euro, 100,000 base currency is 100,000 euros, the exchange rate is converted to $120,000 (at an exchange rate of 1.2 for example) When the exchange rate rises to 1.2001, the total value of the contract is $120,000 minus $120,000 to get the difference of $10 (according to the fall to 1.1999 is also $10) So, the point value of EURUSD is $10 For USDJPY, 100,000 base currency is $100,000, assuming the current exchange rate is 104.00, then $100,000 converted to 104,000 yen If the exchange rate rises from 104.00 to 104.01, the total value of the contract is 10401,000 with the change before 10,400,000 minus 10401,000 after the change, you can get 1,000 yen (1,000 yen) and then convert 1,000 yen into U.S. dollars, that is, 1,000 divided by 104.1, to get the USDJPY point value of $ 9.606 4, the calculation of the amount of profit and loss of positive currency pairs is very simple, only need to calculate the difference between the bid price and the ask price. For the reverse currency pair, the point value is often in a floating state, and it is more troublesome to calculate the amount of profit and loss Summary: The calculation of the foreign exchange market is not only the margin, point value, profit and loss amount of these simple contents, there are complex concepts about the account net value, balance, risk rate, etc. Although these values can be calculated automatically through MT4 The market is not just about margin, point value, profit and loss amount, but also about account equity, balance, risk rate and other complex concepts, although these values can be calculated automatically through MT4, but for serious traders, they can independently calculate, will greatly improve their understanding of the transaction to know that any high-end risk control techniques do not leave the complex formula, solid trading arithmetic ability is indispensable, do not give up learning because of a moment of laziness