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 PART 1.

How to understand forex trading

When you trade stocks, you can select how many stocks you want to buy or sell (if you

plan to go short). With Forex you are trading a currency. You can’t select that you want

to sell 7523 euros. Starting point is 1 lot which is 100,000 units of base currency.

1 lot for EUR/USD = 100,000 euros

2 lots for EUR/USD = 200,000 euros

0.1 lot for EUR/USD = 10,000 euros

That way you can decide how much base currency you want to invest.

Of course, you do not have to have all that money in your account. Thanks to leverage

you have only split of that amount.

In Forex, minimal movement is one pip. For standard basic 1 lot (100,000 units) move

of 1 pip is equal to 10$ change.

Why people are losing money in Forex

It is because they do not understand leverage. It is very powerful, yet very dangerous

perk that you get when you decide to trade Forex.

With only few hundred dollars you can open positions which are as big as 100,000

dollars or euros and larger. When you are right in your trade, then you make good

money. When you are wrong… well, you can be out of funds very soon.

That is why new traders should start from lower sizes – micro lots or even nano lots.

This is similar to stock market. It is a bad idea to start investing in stock market and

learn how to invest with real 100,000 or 500,000$. The risk is too big. It is easier to

learn on smaller capital. Same is with Fore

Start small – Nano, micro lots

You won’t get rich fast by trading micro and nano lots, but thanks to them you will stay

in the game and you will have opportunity to learn from live trading. The reason why

so many traders lose all their money in the Forex is because:

• their trading capital is too small

• they open too big positions, because they do not understand leverage

So yeah, it is like in many ads you could see in the past – “you can open account with

just 100$. Leverage even 1:500”. In the end, you need one or few positions of 1 lot size

to blow up your account.

You should remember that 1 lot is a base for calculating size of your position.

1 lot = 100,000 units of a currency

In MetaTrader4 it will be on select list like: