Abstract：You must first open an account with a retail forex broker or a CFD provider in order to begin trading forex. After your account has been approved, you can begin transferring funds into it.
You must first open an account with a retail forex broker or a CFD provider in order to begin trading forex.
After your account has been approved, you can begin transferring funds into it.
Only “risk capital,” or money you can afford to lose, should be put into this new account.
The “Account Balance” or the “Balance” is your account's beginning balance.
In a nutshell, it's the indefinite amount of money in your bank account.
Consider the following scenario:
Balance = Cash
The amount of money in your trading account is represented by your Balance.
If you deposit $1,000, your balance will be as well $1,000.
When you start a new trade, or “open a new position” as traders call it, the balance in your account is not affected until the position is CLOSED.
This means that just one of three things can happen to your Balance:
· When you increase the amount of money in your account.
· When a position is closed.
· When you leave a position open overnight and either get paid or have to pay a swap/rollover cost.
In reality, the notions of swap and rollover aren't linked to the topic of margin because it's about margin, but they're included for completeness, we'll go over everything quickly because switch fees do reduce your Balance.
Just keep in mind that there's a difference between a deal that lasts a few hours and one that lasts all night.
A rollover is the process of shifting open positions from one trading day to the next.
Most brokers do the rollover automatically at the end of the day by terminating any open positions and concurrently opening a new position for the next business day.
A swap is calculated during this rollover.
If you keep your transaction open overnight, a swap is a fee that is either paid or levied to you at the end of each trading day.
Cash will be added to your Balance if you are paid exchange.
Cash will be withdrawn from your Balance if you are charged swap.
Unless you're trading large positions, swap fees are normally minor, but they can mount up quickly.
By opening a “Terminal” window and clicking on the “Trade” tab in MetaTrader, you can view swaps on your open position (if you keep it open for more than one day).
The concepts of swap and rollover are beyond the scope of this lecture and will not be covered further, but we wanted to mention them briefly for completeness' sake.
Now that we've established what Balance is, let's look at the terms “Unrealized P/L” and “Realized P/L” and how they effect your Balance.
What is Unrealized P/L and Floating P/L?