CFD’s

At Trader’s Way, Prime Online Forex and CFD broker, our clients have access to some of the most competitive trading conditions in the market including state of the art trading terminals along with the very latest, in trading tools and apps. Along with custom accounts, clients can utilize their automated scripts on the platform. As part of our ongoing process to ensure that all traders are informed regarding all aspects of the market, here’s a brief recap on CFD’s. A CFD, or a Contract For Difference, is essentially an agreement between two parties, where in both the parties agree to exchange the difference between the opening and closing rates of a specific contract when it is closed, with the number of units as specified in the contract being factored in. Essentially, a CFD is a derivative that involves no physical delivery of any sort, so the two parties would not be exchanging any physical asset. 

Example: Sam opened 1 standard lot of EURUSD long (that is, Sam bought 100,000 EUR-versus-USD CFDs). At the time of Sam's purchase, the current rate was 1.3000. Sam has just closed and the closing rate was 1.4000. When he closed, Sam made a profit = (1.4000 - 1.3000) x 100,000 = 10,000 USD.

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Currency Pair

At Trader’s Way, Prime Online Forex and CFD broker, we ensure our quotes reflect a high degree of precision and that the spreads for all currency pairs, are some of the lowest. As part of our ongoing edu series, here’s a brief recap on “currency pair”. In the forex market, traders would buy one currency while selling the other; essentially a trader would be going “long” on one currency while simultaneously going “short” on the other currency of the pair. So traders would be trading two currencies or a pair. 

Example: When you buy EURUSD, you buy euros and sell dollars.

Currencies are denoted by 3 capital letters, the first two are the same as the country code while the last stands in for the currency name. 

Example: USD = US dollar, where "US" = the United States and "D" = dollar.

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Bid/Ask (Offer) Price

At Trader’s Way, Prime Online Forex and CFD broker, we provide our clients with state of the art trading terminals, the very latest in trading tools, apps and some of the most competitive trading conditions in the market. As part of our ongoing edu series, aimed at providing information for new traders, here’s a brief recap on Bid/Ask price. The bid price is the rate at which the trader can sell or short his position where as the “Ask” is the price at which the trader can buy or go long. 

Example: The quoted EURUSD rate at the moment is 1.3029/1.3030. This means that 1.3029 is the bid price - a trader can sell EURUSD at this price, whereas 1.3030 is the ask price - a trader can buy EURUSD at this price.

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Try Best MT4 ECN from $10 ONLY!

At Trader’s Way, Prime Online Forex and CFD broker, clients have access to the very latest in trading tools, apps, including state of the art trading terminals. In addition to providing clients with some of the most competitive trading conditions with unlimited trading opportunities, Trader’s Way makes it possible for traders to trade on the interbank market with the lowest on the market deposit. With MT4 ECN, traders can take advantage of the low deposit, 0 pip spreads, accurate quotes, and fast execution. Traders can trade any size starting with 0.01 lots (1,000 units).  For more details, do check out www . tradersway . com

Pip

At Trader’s Way, Prime Online Forex and CFD broker, we provide our clients with the most competitive trading conditions, along with the latest in trading tools, apps, etc. Clients can look forward to extremely precise quotes along with some of the lowest spreads in the market. As part of our ongoing EDU series, aimed at new traders, here’s a recap on Pip. Currencies are usually quoted with four decimal points and 0.0001 is the least by which the quote could change and was the smallest price increment. But now, thanks to better precision, currency quotes are now represented with five decimal points and can change value by 0.00001 also known as pipette. But despite the currency being quoted with five decimal points, the value of the pip remains the same. 

Example: Currency pair prices used to have 4 digits after the decimal point (e.g. EURUSD at 1.2539), and 0.0001 was the smallest amount by which the price could change (e.g. from 1.2539 to 1.2540).

Now, however, prices can change by one-tenth of a pip, or by 1 fractional pip, also called a pipette.

Example: USDJPY was usually quoted with 2 digits after the decimal point, e.g. 77.21/77.23, and 1 pip = 0.01. Now you can see the following quotation - 78.513/78.524, where the smallest price change is 0.001 = 0.1 pips = 1 pipette.

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Pip value

At Trader’s Way, Prime Online Forex and CFD broker, we ensure our clients have access to the very latest in trading tools, apps including state of the art trading terminals. In addition, traders can count on precise currency quotes, derived from multiple liquidity brokers and spreads that can go as low as 0 pips, depending on market volatility. Here’s a brief recap on how to calculate Pip value. In order to calculate the value of one pip, traders can use the formula listed below, in order to derive the Pip value in terms of the counter currency.

Pip Value = Position Volume x Counter Currency 1 pip

Example: Position 1 lot of EURUSD. Pip Value = 100,000 x 0.0001 = 10 USD

In order to work out the pip value in terms of your account currency, traders can use the one listed below.

Pip Value in Account Currency = Pip Value / Account Currency-Counter Currency Rate

Example: Position 1 lot of USDJPY. Account Currency - USD. USDJPY = 80.00. Pip Value = 100,000 x 0.01 = 1,000 JPY. Pip Value in USD = 1,000 / 80.00 = 12.5 USD

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Equity  

At Trader’s Way, Prime Online Forex and CFD broker, clients have access to some of the most precise quotes, latest trading tools and apps. Moreover, we provide our clients with the most competitive trading conditions; enabling them to take advantage of even the smallest movement in the market. As part of our ongoing edu series, here is a brief recap on “Equity”. Equity is the amount that is left once a trader closes all open positions; in short, equity is the balance plus profits or losses.   

Equity = Balance + P&L  

Example: Sam's balance is 2,000 USD. Before he opens any positions, his equity = his balance = 2,000 USD. Sam buys 1 standard lot of EURUSD. The price goes up and his P&L is 1,000 USD. Now Sam's equity = his balance + P&L = 2,000 USD + 1,000 USD = 3,000 USD.  

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MT4 Mobile Apps

At Trader’s Way, Prime Online Forex and CFD broker, we provide our clients with the latest, trading tools to state of the art trading platforms. In addition, clients can now use the mobile app and devices from smartphones to tablet PCs to manage their accounts seamlessly, while on the move. Our mobile apps provide traders for an easy option to track the market while granting them the same functionality as the desktop platform.  Traders can use the mobile app to analyze the market, utilize trading tools and perform all trading related operations on their account. For more information, please check out www . tradersway . com

Margin

At Trader’s Way, Prime Online Forex and CFD broker, we provide our clients with the very latest from trading tools, apps, state of the art trading terminals to some of the most competitive trading conditions in the market.  As a result, our traders are able to take advantage of even the smallest movement in the market. As part of our ongoing edu series, here is a brief recap on Margin. Margin is the amount that is required to open or maintain a position, where the initial margin equals position divided by leverage.

Initial Margin = Position / Leverage

Example: Sam's account balance is 2,000 USD. His leverage is 1/100. Sam wants to open 1 standard lot of EURUSD. The current EURUSD rate is 1.3000. Stop-out = 10%.

Initial Margin = 100,000 EUR / 100 = 1,000 EUR (or 1% margin requirement) = 1,300 USD

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Maintenance margin and stop out level

At Trader’s Way, Prime Online Forex and CFD broker, we provide our clients with the very latest in trading tools, to the most competitive trading conditions in the market, enabling them to take advantage of even the smallest market movement. As part of our ongoing series, here’s a brief recap on Maintenance margin and stop out levels.  Maintenance margin is the least margin that is required to keep a position open; once a trader’s margin falls below the stop out level, all open positions are closed. Do note that the stop out level may vary from one broker to the next.

Maintenance Margin = Initial Margin x Stop-Out Level

Example: Sam's account balance is 2,000 USD. His leverage is 1/100. Sam wants to open 1 standard lot of EURUSD. The current EURUSD rate is 1.3000. Stop-out = 10%.

Initial Margin = 100,000 EUR / 100 = 1,000 EUR (or 1% margin requirement) = 1,300 USD

Maintenance Margin = 1,300 USD x 10% = 130 USD

When equity on Sam's account goes below 130 USD, the position will be closed automatically.

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