How do you calculate how much money you can make off of a trade? An example would be awesome. I cannot this and its driving me up the chimney. What is a unit? What is a lot? How does unit or lot differ from standard account im using in practice to mini account what I will most likely be using in 20 years when I make my account: I'll give you some very basic answers but you really need to go through The School of Pipsology more than once, if necessary , until these basics are planted firmly in your brain.

The strict definition of "lot" is the so-called "standard lot" equal to , units of base currency. Originally, when retail forex trading was introduced to average speculators, there were only standard lots. So, there was no confusion. And sometimes when people say "lot", they mean the mini-lots, or micro-lots, or nano-lots that they trade. Be careful of terminology. Four factors determine anticipated profit in a trade: Let's say you have an account denominated in USD that is, you deposited U.

If you trade a pair with a quote currency that does not match your account currency example: There are Pip-Value Calculators for this. If you use a Position Size Calculator to determine how many lots or units you should trade, given a predetermined risk percentage, the Position Size Calculator will calculate the appropriate pip-value and factor it directly into the position-size calculation.

We are gaining again Oanda, let me expalin this with help of an example for the meaning of units, lots and profit calculations. Divide the price I am paying or borrowing at by pip differs based on pair and then multiply by number of units in the lot? Its literally blowing out my temporal bones.

D I finally get it. D That is definitely the sentence that was not settling right in my bouncy house of a cerebrum. I heard only a page ago in pip school that some pairs do not go out to the fourth decimal like how jpy I think it was goes out to the second decimal.

Would the equation be the same in that instance, Does mt4 stretch the jpy price to the fourth decimal anyways?

If this is too much questions I totally understand. You've done more than enough answering and I dont plan on even practice trading for so long that I have plenty of time to worry about that. I am glad that I understand what we've been talking about though now so I am not so worried about moving forward in pip school.

I didnt mark these few pages as complete though so I remember to come back and look at them before moving back into my practice account. Another related question that I have is on the figuring amount of margin required to make a trade. I may wait a few days to ask these questions unless I can get the answers on this same thread. Maybe the topic will be retouched on in the school. Mini accounts trade mini lots. The only part that confuses me on the topic of margin is where they got the 0.

I suppose these question won't likely be the last questions that I have but I am not sure where else to ask these questions. If you have advice on where to ask the rest of these questions I would be grateful for that information as well. Notice that this example is based on a yen-pair. The numeral in the fourth decimal place is defined as 1 pip in all other pairs.

In a price such as If the price were given as In a price such as 1. If the price were given as 1. There is at least one broker who limits leverage to I don't recommend this broker, so don't ask. The point I'm trying to make is that margin doesn't HAVE to be related to leverage, but it almost always is.

That absolutely cleared that up. That information is priceless right now as I would've been super confused when I reach the how portion of the training. Next up in Pip School the differences between brokers and how to avoid the "evil ones.

You're asking some very basic questions. Quick answers to your questions with your first question answered last 1 What is a unit? A lot is bunch of units. They do not vary from one type of account to another. Lots are defined in answer 2 above. Obviously then, a pip move from 1. Just to repeat my first comment to you study and master the School of Pipsology. That's where all the basics are covered. You got some personal tutoring above. But, that was a one-time thing.

Just go and sign up for Babypips school and start educating your self. Wow awesome, Thanks so much for the explanation. Okay so long story short do I Divide the price I am paying or borrowing at by pip differs based on pair and then multiply by number of units in the lot? Here is the sentence that's causing your confusion. The two steps would look like this First step: Using this rule, we simply do the multiplication first and then do the division, as follows: Same result, either way.

Refer to the rewritten equation which I gave you in the previous post: There are three quantities in that equation: Yen-prices are quoted in either 2 decimal places or 3 decimal places not 4 decimal places.

I hope that clears things up for you.

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