The Fx Model


The online retail platform facilitates the investors to indulge into FX Trading. It provides a 24/5 facility to carry out investment business. The whole concept is to open a FX account and set your base currency e.g. US Dollar and fund it. Through this capital you can trade FX products which are various currencies such as GBP/USD and EUR/USD.


You do this through managing your equity. It is a marginal account in which the investors enjoy high leverage benefits. The profit margin comes through appreciation and depreciation of currencies due to the supply and demand factors. Due to leverage, the quantity traded in terms of total value is huge and a slight move in the currency rates results in huge trading opportunities. This can be further explained using the following E-commerce Model:

Profit Margin= (Bid Price - Ask Price x Lot Size x No. of Lots)


For any given pair of currency there is an ask price and a bid price. The difference between both the prices is known as spread. The spread is calculated in terms of pips (the minimal increase or decrease in the value of the currency). When you open a FX position you are not required to pay the full value of the trade.


The online trading of our principal allows trading on leverage up to 1:200. According to the market opportunities and market directions you can decide upon the volume to be traded. Let us assume that we are trading 200000 units in our example.


On a daily basis, any given pair of currency has an average daily movement calculated from past movements. For example EUR/USD shows a movement of around 80 to 150 points. It is different for different currencies.


Let us consider the GBP/USD stands at bid price $1.6350. The GBP/USD has a spread of around 3 pips under normal market conditions. This means that the ask price will be $1.6353. If you trade 100,000 GBP at 1:200 leverage, the total margin required will be approximate $850.


Movement in one point will result in $10 increase or decrease. If the market moves 30 points in positive direction the pound will be valued at 1.6380. If we liquidate or close our trade at this point we will earn a profit of $300 and this movement normally takes place within 4-5 hours. Remember that a similar move can be against you as well. In that case a loss may be incurred.

Profit Margin= (1.6380-1.6353) x 100,000 x 1=$270
* Without proper risk management, currency trading has a high degree of leverage which can lead to large losses as well as gains.
FOREX Trading