Forex Academy:
Primary School
5 minutes
Lesson 6
How to calculate profit in Forex trading?
- How much can you trade per trading transaction?
- How much money is needed for 1 transaction?
- How to calculate trading profits?
How much can you trade per trading transaction?
In Forex terminology, the terms LOT, MINI LOT, and MICRO LOT are used to represent the amount of currency.
A LOT is similar to a bag of money.
At Hirose,
you can trade from 0.01 LOT (= 1 MICRO LOT = 1,000 units of currency)
For example,
– Buying 0.01 LOT of USD/IDR means buying 1,000 USD.
– Buying 0.01 LOT of EUR/IDR means buying 1,000 EUR.
How much money is needed for 1 transaction?
You only need capital amounting to 1/300 of the trading amount.
For example,
When the price of USD/VND is 22,000, if you trade 0.01 LOT (1,000 units) of USD/VND,
The trading amount = 22,000 VND x 1,000 units = 22,000,000 VND.
In Forex, you can trade an amount 300 times larger than your capital!
But how can you trade an amount 300 times larger than your capital? In FOREX, there is a mechanism called “Leverage“.
Through Leverage,
you can trade with captial amount to only 1/300 of the trade amount.
For example, if you want to trade 22,000,000 VND,
The required capital = 22,000,000 VND / 300 = 73,333 VND.
The required capital for the trade is called the “Margin“.
If the transaction amount is 300 times larger, what will the profit be?
The profit will also increase 300 times.
Let’s compare two cases “With Leverage” and “Without Leverage” with the same capital amount!
Capital: 220,000 VND
If there was no Leverage, the profit would only be 10,000 VND,
but with Levarage, the profit can reach 3,000,000 VND
When the trading amount is 300 times larger, the profit will also increase 300 times!
The lesson on “Profits from Forex Trading” ends here!
Let’s check to see if you understand the lesson!
In the next lesson, we will guide you about what you need to trade.
Please continue to follow.
If you have any questions, please feel free to contact us.