{"id":333,"date":"2013-12-02T19:24:35","date_gmt":"2013-12-02T19:24:35","guid":{"rendered":"http:\/\/www.forexearlywarning.com\/blog\/?p=333"},"modified":"2025-02-06T19:13:55","modified_gmt":"2025-02-06T19:13:55","slug":"forex-market-usdjpy-buy-signal-1222013","status":"publish","type":"post","link":"https:\/\/www.forexearlywarning.com\/blog\/2013\/12\/02\/forex-market-usdjpy-buy-signal-1222013\/","title":{"rendered":"Forex Trading Returns Using Leverage – DELETE"},"content":{"rendered":"\n

When you use leverage to trade the forex market your returns can be much higher than most typical non leveraged investments or non-leveraged trading. You only have to put up a small amount of money to control a much larger amount. Small movement can result in much larger percentage profits. Losses can be managed with stop orders and moving stops to breakeven.<\/p>\n\n\n\n

To open a leveraged position, you only need to deposit a fraction of the total trade value, called the margin<\/em><\/strong>. <\/p>\n\n\n\n

Example Leveraged Forex Trading Return Calculation #1:<\/strong><\/p>\n\n\n\n

Account balance: $10,000 <\/p>\n\n\n\n

Pair: EUR\/USD Buy<\/p>\n\n\n\n

Deposit Amount for Trade: $1000<\/p>\n\n\n\n

Leverage: 100:1 <\/p>\n\n\n\n

Position size: $100,000 (calculated by multiplying account balance with leverage) <\/p>\n\n\n\n

Scenario: Market moves 1% in your favor<\/p>\n\n\n\n

Profit: ___ Pips or $1,000  <\/p>\n\n\n\n

Return on Investment: 100% which is $1,000 profit divided by $1,000 initial investment) <\/p>\n\n\n\n

Total Return on Account: Since account starting balance is $10,000 return on account including non-margined funds is $1,000 divided by $10,000 which is 10%.<\/p>\n\n\n\n

If you make 4 trades in one month with 1% return each your account balance will be $14,000 at the end of the month which is a 40% return on the total account.<\/p>\n\n\n\n

USD IMAGES READY<\/p>\n\n\n\n

Example Leveraged Forex Trading Return Calculation #2:<\/p>\n\n\n\n

Account balance: $10,000<\/p>\n\n\n\n

Pair: GBP\/JPY Sell<\/p>\n\n\n\n

Leverage: 50:1 <\/p>\n\n\n\n

Deposit Amount for Trade: $2000<\/p>\n\n\n\n

Position size: $100,000 which is $2000 x 50<\/p>\n\n\n\n

Scenario: Market moves 200 pips or 1.33% in your favor.<\/p>\n\n\n\n

Profit: ___ Pips or $669<\/p>\n\n\n\n

Exchange Rate at Entry: 150.00 (1 GBP = 150.00 JPY)<\/p>\n\n\n\n

Exchange Rate at Exit: 148.00 (1 GBP = 148.00 JPY)<\/p>\n\n\n\n

Position Size: With 50:1 leverage, you control $100,000 worth of GBP\/JPY (2,000 * 50).<\/p>\n\n\n\n

Number of GBP sold: $100,000 \/ 150.00 = 666.67 GBP.<\/p>\n\n\n\n

Buying GBP back: When the rate drops to 148.00, you buy back those 666.67 GBP for JPY: 666.67 GBP * 148.00 = 98,667.16 JPY Initial Investment = $2,000 (or equivalently, 300,000 JPY at the entry rate of 150 JPY per USD) Final Value in JPY = 98,667.16 JPY, which at the exit rate equals $669.37 (98,667.16 JPY \/ 148 JPY per USD) Profit in USD = $669.37<\/p>\n\n\n\n

Return On Investment: ($669.37 \/ $2,000) * 100 = 34.7%<\/p>\n\n\n\n

Total Return on Account: Since account starting balance is $10,000 return on account including non-margined funds is $669 divided by $10,000 which is 6.7% on one 200 pip GBP\/JPY trade.<\/p>\n\n\n\n

If you make 2 trades in one month with 6.7% return each your account balance will be $11,338 at the end of the month which is a 13% return on the total account.<\/p>\n\n\n\n

GBP\/JPY IMAGES READY<\/p>\n\n\n\n

Risk Management<\/p>\n\n\n\n

these examples are simplified to focus on the mechanics of leverage in forex gains.<\/p>\n","protected":false},"excerpt":{"rendered":"

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