4. Margin Broking Systems
Going Long and going Short
When you first buy or sell, you are said to be
opening or taking a
‘position.’
In making that decision, you are looking to make profits by
following the golden rule of trading –
BUY LOW and SELL HIGH.
There are three basic positions that you might have at any time
‘Square’ or ‘Flat’
– when you have no open positions in the market and so no risk
of making a profit or loss.
‘Long’
when you have bought a currency pair on the
expectation that the price will rise or increase
over time.
BUY LOW FIRST - SELL HIGHER LATER |
|
‘Short’
when you have sold a currency pair on the
expectation that the price will fall or decrease
over time.
SELL HIGH FIRST– BUY LOWER LATER |
When you open a position, the trading software will constantly
update a figure of Unrealised gain/loss, based on a revaluation
of your position to current market rates if you chose to buy or
sell the position immediately. When you
close that position,
it will automatically convert your profits or losses in any
currency pair into the accounting currency which is USD,
displaying them on the screen, and adding them to or subtracting
them from the realised profit, or your initial margin.
Making your first trades
When you have made a decision to buy or sell a particular
currency pair, and want to open your first position, you first
decide how many lots you wish to trade in, and set that in the
drop down window. The price that is displayed is the broker’s
current buying and selling is a live price, and as soon as you
click on the buy or sell key, a deal confirmation will appear in
green.
The deal is done !
Click continue to redisplay the price and prepare for the next
trade.
If the price moves before you can click on buy or sell, a red
warning will let you know you have missed that price, and for
safety will reset your lots amount to zero. Setup your lots
amount again and you are ready to trade at the next price.
A new position will then go into the position management window,
and the software will display a live profit and loss figure
based on the current price as it moves, until you close the
position at a different price. You can have a number of
positions simultaneously, in different currency pairs. The deal
blotter and activity log windows shows all the trades you have
made, and a log of orders placed and executed or cancelled.
ISO
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