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Forex Trading Q&A for the day

by , 19 May 2022
Forex Trading Q&A for the day
Q. "Trader X recently sent out a Forex trade to short (sell) the EUR/ZAR. I am currently trading Forex CFDs and would like to ask how I can calculate the minimum rands risked per pip movement if I traded 5 CFDs. Do you have a formula to help with this?”

A. Hi John S, yes I can absolutely help with this.

Just for a reminder. The Pip value is basically, how much money you can gain or lose, each pip (movement) the Forex market moves for or against you.

There are two ways to find the pip value or rands risked per pip when you trade Forex CFDs.

Either you can call your broker and ask them what the pip value is for the specific market (i.e EUR/ZAR).

Or you can work it out yourself, to see what the current pip value is.

You’ll need only 1 value to work out the pip value of the EUR/ZAR.

Exchange rate:
EUR/ZAR – R16.94

This means, 1 Euro will cost you R16.94 to own or be exposed to.

However, the exchange rate is 1 Euro: R16.94. To work out the pip value, we’ll need to the exchange rate per cent.

Which in this case is 0.01 EUR : 0.1694.

This is one step most traders forget to implement with the pip value.

Now we will simply plug the Exchange rate per cent into the Pip value calculation.

Pip value (rands) per CFD

= (1 Pip X Exchange rate per cent X 10)
= (1 Pip X R0.1694 X 10)
= R1.6940

With 1 CFD, each pip that moves for or against you, you will gain or lose R1.6940 in the trade.

If you bought 5 CFDs, then each pip that moves for or against you, you will gain or lose R8.47 (5 CFDs X R1.6940).   
 
The number of CFDs you buy or sell, will purely depend on how much you’d like to risk per trade.


What a Red Hot Storm Trader has to share:

 

 “I was struggling to find good markets and entry levels. Trying to do this alone was one of the most overwhelming issues I had. That was until I came across Red Hot Storm Trader. Everything is laid out with both technical and news information with precise trading levels and reasons. I feel I have a guide now to direct me into the right direction as an aspiring trader. I can’t wait for the next trade!”
 

To join in on the profits with Timon: go here…

 
Q. “I refer to the last Red Hot Storm Trader trade idea with First Rand. The Entry is at R65.05 and the stop loss is at R68.50. How can the stop loss be above the entry price in a trade?”

A. With trading derivatives such as CFDs or Spread Betting, we are able to make money whether the market rises or falls.

We don’t only profit when the market moves up.

There are two ways you can trade a market.

Either you can buy (go long) a trading position at a low price, with the expectations that the market will move up, where you’ll sell it at a higher price for a profit.

In this scenario, the trader benefits from a rising market.

The second way we profit is when the market drops in price.
 
This is where you can sell (go short) a trading position at a high price, with the expectations that the market will drop, where you’ll buy back your position at a lower price for a profit.

In this scenario, the trader will benefit from a falling market.  

That’s why in the SMS with the Firstrand CFD trade you’ll see I sold at a high price (Entry), as I expect the price to drop further (to my take profit), and I placed my stop loss (risk) above the entry price in case the market turns up again.

 
 

We are seeing downtrends at the moment, world markets like (the SP500, Nasdaq, JSE) have all fallen over 20%.

Also, commodities have dropped 10% plus and cryptocurrencies have fallen 40%, 50% and even 99%.

That’s why it’s important to take advantage of the downtrend and short the markets. With Red Hot Storm Trader, I am taking full advantage in the falling markets at the moment.

If you wish to profit from the market crashes in 2022,
click here for more info.

Trade well, live free.

Timon Rossolimos
Founder, Mati Trader System

PS. If you’ve always wanted to learn how to trade CFDs but don’t know where to start, then my programme, Mati System Trader may just be what you need. 
You can take a look here.

PPS. "These three stocks could accelerate your early retirement", according to my friend Josh over at Real Wealth, you can find out how to get the full analysis here.




Forex Trading Q&A for the day
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