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Forex currency position

Currency position on the Forex exchange is important for the trader because it is based on all the trade - and profit including. Understanding the limits of open currency positions allows to obtain more profit in trade, as well as coordinate the volume of transactions. Below we consider the concept of foreign currency position in the general sense and in Forex.

Determination of currency positions

Currency position - this ratio requirements and forward transactions obyazatelstv participants Exchange operations (operations on an exchange). Making the purchase and sale of a particular currency in the presence of a stay of execution claims and liabilities, which is characteristic of the so-called derivatives market participant has some requirements (if the buyer) in obtaining foreign currency asset and / or liability (if the seller) for supply of foreign currency assets. And claims and liabilities expressed in a particular currency equivalent determined.

Distinguish between closed and open currency positions.
If the assets and liabilities in foreign currency bank or company are equal quantities Currency position considered closed. If assets and liabilities differ, consider the open foreign exchange position.

Open currency position can be long (long, Long) and short (short, short).

The long foreign exchange position requirements (assets) exceed liabilities (liabilities) acquired by currency, ie currency bought more than sold. With a short foreign exchange position liabilities (liabilities) exceed the requirements (assets) to sell the currency, ie Currency sold more than bought.

To compensate for the (closing) as long and short foreign currency position must perform a similar volume, currency and date of execution of the transaction position. Ie, foreign exchange position created for a specific currency pair (currency) and may be closed during operations on Forex.

Risks of currency positions

Open currency position is always associated with foreign exchange risk, because at the time of execution of obligations and requirements, ie closing position, the exchange rate may change unfavorably for us aside. As a result, the trader may incur losses. We are interested in making a profit. With backtesting mt4 less risks.

In the carry trade, the aim is to profit from foreign exchange transactions on the exchange Forex trader uses different types of analysis to predict the movement of foreign currency assets in the future. Based on the analysis, open foreign exchange position - buy or sell, long or short. Next, you need to set stop orders to get out of foreign currency position with a certain loss or profit. Installing TakeProfit not required and is determined by your trading strategy. Many traders prefer to close their positions at a profit manually.

On the contrary, setting StopLoss necessary because after we entered the market, the price can make a sudden movement against the position that is fraught with significant losses. Setting a stop order, we limit our risks and loss of funds.

It is also important to remember the limits of open currency positions. For example, trading on cent broker account Forex4you (eg, Cent Lite), we can not enter into the market of more than 10 lots or open and more than 200 foreign exchange position. If we work on CentNDD, the maximum lot is 100 and the number of transactions indefinitely. All this must be aware of and responsive to the real trading.

To see all the details on the specific trading account, you need to familiarize yourself with the trading conditions on the website of your chosen broker.

From trade, use popular currency pairs like EUR/USD, GBP/USD, etc. Do not just go on the warpath to exotic cross rates like EUR/NZD or CAD/JPY. Exotic currency pairs have a big spread and significant volatility. In contrast, classic euro and the pound, for example, allow you to make a profit already in the early stages of trading.

Consider trading volumes in its trade. Start with the minimum (0.01 or 0.1). Initially, it is important the number of earned points and not profit in dollars. If you make more losing trades, then the monetary loss in this case would be small. Over time, you can always increase the volume, the main thing - to trade profitably.

We wish you a successful and profitable trading!

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