Trading Archives - OneRoyal Academy

How Does Dynamic Leverage Work?

Leverage Information OneRoyal uses dynamic leverage for various financial instruments (FX majors, FX minors, metals, indices, oil) to maximise your trading potential. FX Majors: 1:1,000 FX Minors: 1:500 Metals: 1:500 Indices: 1:200 Oil: 1:100 Dynamic Leverage Dynamic leverage model allows for the leverage to adapt based on your trading positions. Dynamic leverage is applied on a per instrument basis, where the leverage will automatically decrease as your trading volume increases. This allows traders to maximise their trading potential while ensuring responsible risk management strategies remain in place. For example, if you trade 5 lots on EURUSD and 5 lots on GBPUSD, then the leverage for both positions will remain at 1:1000. If however, you trade 10 lots on EURUSD, then the first 5 lots will be calculated with a leverage of 1:1000 while the remaining 5 lots will be calculated with a leverage of 1:500. Forex Margin Requirements Lots Margin Requirement Maximum Leverage 0 – 5 0.1% 1:1,000 5 – 50 0.2% 1:500 50 – 100 0.5% 1:200 100 – 200 1% 1:100 200-300 2% 1:50 300 – 500 5% 1:20 500 – 1,000 10% 1:10 Example 1 Example 2 Example 3 Client Account Leverage – 1:1000 Consider a USD account with 3 lots on USDJPY (either Buy or Sell) FX Example 1 Lots Applicable Margin Margin Calculation Required Margin 3 0.1% 3 (Lots) * 100,000 / 1000 (leverage) 300 USD 3 Margin Requirement in Account Currency 300 USD Client Account Leverage – 1:1000 Consider a USD account with 150 lots on USDJPY (either Buy or Sell). FX Example 2 Lots Applicable Margin Margin Calculation Required Margin 5 0.1% 5 (Lots) * 100,000 / 1000 (leverage) 500 USD 45 0.2% 45 (Lots) * 100,000 / 500 (leverage) 9,000 USD 50 0.5% 50 (Lots) * 100,000 / 200 (leverage) 25,000 USD 50 1% 50 (Lots) * 100,000 / 100 (leverage) 50,000 USD 150 Margin Requirement in Account Currency 84,500 USD Client Account Leverage – 1:1000 Consider a USD account with 500 lots on USDJPY (either Buy or Sell). FX Example 3 Lots Applicable Margin Margin Calculation Required Margin 5 0.1% 5 (Lots) * 100,000 / 1000 (leverage) 500 USD 45 0.2% 45 (Lots) * 100,000 / 500 (leverage) 9,000 USD 50 0.5% 50 (Lots) * 100,000 / 200 (leverage) 25,000 USD 100 1% 100 (Lots) * 100,000 / 100 (leverage) 100,000 USD 100 2% 100 (Lots) * 100,000 / 50 (leverage) 200,000 USD 200 5% 200 (Lots) * 100,000 / 20 (leverage) 1,000,000 USD 500 Margin Requirement in Account Currency 1,334,500 USD Metals Margin Requirements Lots Margin Requirement Maximum Leverage 0 – 5 0.2% 1:500 5 – 20 0.5% 1:200 20 – 100 1% 1:100 100 – 200 2% 1:50 200 – 400 5% 1:20 400 – 500 10% 1:10 Example 1 Example 2 Example 3 Client Account Leverage – 1:1000 Consider a USD account with 3 lots on GOLD (either Buy or Sell) Metals Example 1 Lots Applicable Margin Margin Calculation Required Margin 3 0.2% 3 (Lots) * 100 oz * 1,800 (Price) / 500 (leverage) 1,080 USD 3 Margin Requirement in Account Currency 1,080 USD Client Account Leverage – 1:1000 Consider a USD account with 15 lots on SILVER (either Buy or Sell). Metals Example 2 Lots Applicable Margin Margin Calculation Required Margin 5 0.2% 5 (Lots) * 5,000 oz * 25.150 (Price) / 500 (leverage) 1,258 USD 10 0.5% 10 (Lots) * 5,000 oz * 25.150 (Price) / 200 (leverage) 6,288 USD 15 Margin Requirement in Account Currency 7,545 USD Client Account Leverage – 1:1000 Consider a USD account with 103 lots on GOLD (either Buy or Sell). Metals Example 3 Lots Applicable Margin Margin Calculation Required Margin 5 0.2% 5 (Lots) * 100 oz * 1,800 (Price) / 500 (leverage) 1,800 USD 10 0.5% 10 (Lots) * 100 oz * 1,800 (Price) / 200 (leverage) 13,500 USD 80 1% 80 (Lots) * 100 oz * 1,800 (Price) / 100 (leverage) 144,000 USD 3 2% 3 (Lots) * 100 oz * 1,800 (Price) / 50 (leverage) 10,800 USD 103 Margin Requirement in Account Currency 170,100 USD Cash Indices Margin Requirements Lots Margin Requirement Maximum Leverage 0 – 200 0.5% 1:200 200 – 500 1% 1:100 500 – 1,500 2% 1:50 1,500 – 2,000 3% 1:33 2,000 – 2,500 5% 1:20 2,500 – 3,000 10% 1:10 Example 1 Example 2 Example 3 Client Account Leverage – 1:1000 Consider a USD account with 100 lots on US30 at the price of 34,500 (either Buy or Sell) Indices Example 1 Lots Applicable Margin Margin Calculation Required Margin 100 0.5% 100 (Lots) * 34,500 (Price) / 200 (leverage) 17,250 USD 100 Margin Requirement in Account Currency 17,250 USD Client Account Leverage – 1:1000 Consider a USD account with 25 lots on DE40 at the price of 14,000 (either Buy or Sell). Indices Example 2 Lots Applicable Margin Margin Calculation Required Margin 25 0.5% 25 (Lots) * 14,000 (Price) / 200 (leverage) *1.08 (EURUSD) 1,890 USD 25 Margin Requirement in Account Currency 1,890 USD Client Account Leverage – 1:1000 Consider a USD account with 1,500 lots on US30 at the price of 34,000 (either Buy or Sell). Indices Example 3 Lots Applicable Margin Margin Calculation Required Margin 200 0.50% 200 (Lots) * 34,000 (Price) / 200 (leverage) 34,000 USD 300 1% 300 (Lots) * 34,000 (Price) / 100 (leverage) 102,000 USD 1,000 2% 1,000 (Lots) * 34,000 (Price) / 50 (leverage) 680,000 USD 1,500 Margin Requirement in Account Currency 816,000 USD Future Indices Margin Requirements Lots Margin Requirement Maximum Leverage 0 – 20 0.5% 1:200 20 – 50 1% 1:100 50 – 150 2% 1:50 150 – 200 3% 1:33 200 – 250 5% 1:20 250 – 300 10% 1:10 Example 1 Example 2 Example 3 Client Account Leverage – 1:1000 Consider a USD account with 10 lots on US30 at the price of 34,500 (either Buy or Sell) Futures Example 1 Lots Applicable Margin Margin Calculation Required Margin 10 0.5% 10 (Lots) * 10 * 34,500 (Price) / 200 (leverage) 17,250 USD 10 Margin Requirement in Account Currency 17,250 USD Client Account Leverage – 1:1000 Consider a USD account with 1 lot on DE40 at the price of 14,000 (either Buy or Sell). Futures Example 2 Lots Applicable Margin Margin Calculation Required Margin 1 0.5% 1 (Lots) * 25 * 14,000 (Price) / 200 (leverage) *1.08 (EURUSD) 1,890 USD 1 Margin Requirement in Account Currency 1,890 USD Client Account Leverage – 1:1000 Consider a USD account with 150 lots on US30 at the price of 34,000 (either Buy or Sell). Futures Example 3 Lots Applicable Margin Margin Calculation Required Margin 20 0.50% 20 (Lots) * 10 * 34,000 (Price) / 200 (leverage) 34,000 USD 30 1% 30 (Lots) * 10 * 34,000 (Price) / 100 (leverage) 102,000 USD 100 2% 100 (Lots) * 10 * 34,000 (Price) / 50 (leverage) 680,000 USD 150 Margin Requirement in Account Currency 816,000

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Trading Glossary

Ask price The buy price. The price you pay when buying a financial instrument Aussie The nickname of the Australian Dollar (AUD) Balance The funds in your trading account, not including any open positions Base Currency The currency at which a price is quoted against. For example, the Euro is the base currency in the EURUSD currency pair. The base currency is always the first currency of the pair Basis point 0.01% Bear market A market in which prices have fallen by over 20% Bid price The sell price. The price you will receive upon selling a financial instrument. Blue-chips Shares of well-known, reputable, large companies Bollinger bands Bollinger Bands are volatility indicators used in technical analysis to measure high and low prices in relation to price action Broker The middleman who acts between buyers and sellers to facilitate trading Bull market A market in which prices have risen more than 20% Buy limit An order to buy at, or below, a specified price Buy stop An order to buy at a specified price above the market Cable Nickname of the GBPUSD currency pair. This is due to the exchange rate in the past being transmitted across the Atlantic through an (underwater) cable Candlestick chart Candlestick charts are a method of plotting price action that has been widely adopted by contemporary traders. Originated in Japan. Chart A visualization of market data Chart pattern In technical analysis, chart patterns are certain formalized shapes that traders try to identify CFD A Contract For Difference (CFD) is a way to trade the markets without actually having to buy the underlying instrument. Commission A fee charged by brokers for executing an order. Typically, the commission is calculated as a percentage of the volume of the transaction Commodities Products such as oil, natural gas, platinum, and coffee. CPI (Consumer Price Index) A monthly economic indicator that tracks the changes in the price of goods and services typically purchased by consumers Currency pair Currencies are always valued relative to one another. For example, GBPUSD. In this case the GBP is known as the base currency whereas the USD is known as the variable currency Day trader Someone who buys or sells a financial instrument within one trading day ECB The European Central Bank (ECB) is the central bank of the 19 European Union countries that have adopted the Euro ETF An Exchange-Traded Fund (ETF) is a security that tracks an index or basket of assets and can be bought or sold on a stock exchange Entry Order An Entry Order is an order to open a position when an asset’s price reaches a predefined level Exponential Moving Average (EMA) Exponential Moving Averages trace an asset’s average price over a given number of periods with more weighting given to recent prices Equity Equity is your balance plus any open profit or, if you’re making a loss, your equity is your balance plus any open loss Fibonacci retracement Is a method of technical analysis for determining support and resistance levels Floating loss The unrealised loss of an open position Floating profit The unrealised profit of an open position Forex market The Forex market (short for the foreign exchange market) is the world’s largest financial market. With 12approx. USD 5 trillion traded every day, it’s about ten times larger than the combined global stock markets and it’s open 24 hours a day five days a week Free margin Free margin is the money in your account that is not involved in any open positions and can be used to make a new trade Fundamental analysis Fundamental analysis involves looking at the ‘fundamentals’ in order to seek out profitable trades. The fundamentals include everything from a company’s financial statements through to industry news and the wider economic picture Futures Contracts that allow buyers and sellers to agree upon a price for an asset to be exchanged at a specified later date Guppy The nickname of the Japanese Yen (JPY) Hedging Hedging is a strategy that involves taking more than one position to reduce risk. For example, if you were buying EURUSD you might consider selling EURAUD at the same time Ichimoku cloud An advanced indicator from Japan for spotting price trends Index A measure of the changes in a portfolio of stocks Kiwi The nickname of the New Zealand Dollar (NZD) Leverage Leverage is when you are effectively provided with more funds in order to make larger trades – allowing you to make bigger potential profits, but also losses Liquidity If a financial instrument is liquid it means it can be bought and sold quickly and easily Long position Every time you buy an instrument you are deemed to have a long position Lot A standard unit of trading. Its value is the equivalent of EUR100,000 Loonie Loonie is the market nickname of the Canadian Dollar (CAD) MACD MACD is a popular technical indicator used to show changes in the momentum, direction and duration of an underlying asset’s price action Margin The amount required by your broker to open and hold a trade Margin call A margin call is when a broker asks a trader to deposit funds into their trading account in order to continue being able to guarantee open positions Margin level The margin that a trader has available to open further positions. Expressed as a percentage, it is the ratio of equity to used margin Market order An instruction to buy or sell a financial instrument at the current market price Micro lot A Micro lot is a hundredth of a lot, in Forex trading a micro lot represents 1,000 units of the base currency in a pair Mini lot A Mini lot is a tenth of a lot, in Forex trading a mini lot represents 10,000 units of the base currency in a pair Momentum Momentum is the rate at which a price can accelerate, either positively or negatively. Non Farm Payrolls – NFP NFP is an economic indicator released in the U.S. It tracks the changes in the number of employed people. Open position A trade that has been opened and remains in the market Option An Option is a financial instrument that gives one the right, though not the obligation, to buy or sell a given asset at a certain price on a specified date. Order An Order is an instruction from a trader to a broker to buy or sell a specified security Oscillator Indicators that plot the output of an indicator between two extreme values are called Oscillators. Oscillators are employed by traders to identify overbought and oversold conditions Parabolic SAR A technical indicator that is used in trending markets to determine potential entry and exit points and is also employed to set trailing stop-losses Pending order A Pending Order is an instruction to buy or sell a financial instrument at a specified price that has not yet been reached Period In trading a Period is a standardised unit of time used in the monitoring of an asset. Depending on the time frame, it will often refer to one, five, 15 or 30 minutes, one or four hours, one day, one week and one month respectively Pip A Pip is the smallest unit of measurement of a currency pair Pip value Pip Value relates to the value of each pip in a given trade, which is converted into a trader’s account currency Pivot point Pivot Points are technical indicators used to predict short-term movements in price action Portfolio A Portfolio is a group of different financial assets held by an investor Producer Price Index – PPI This is a leading economic indicator which tracks the changing prices of goods and services sold by producers on a monthly basis Price action Price Action is merely the term for describing how prices are moving over a given period on a chart Price channel A Price Channel is the price action that takes place between two parallel lines on a chart Rally A Rally refers to a large upward movement in prices Resistance level Resistance is the level at which the market hits a ceiling which is difficult to penetrate Retracement When price action moves in the opposite direction of the prevailing trend it is regarded as a Retracement Risk capital The amount of capital a trader is prepared to lose, either in a trade, or in a trading account Rollover A Rollover is a position that is kept open overnight without it being settled and which results in the transfer of interest (swap) between trader and broker RSI (Relative Strength Index) A very popular momentum oscillator used in technical analysis to determine whether an asset is overbought or oversold. Scalping A strategy in which traders look to profit from small changes in price by rapidly opening and closing a large number of positions. Sell limit An order to sell a financial instrument at, or above, a specified price Sell stop An order to sell an instrument at, or below, a specified price Sentiment Sentiment is the general and often intangible feeling surrounding a given financial instrument, market or economy Short position/selling This is when you sell a financial instrument Signals Signals is the term given to indications of where to buy or sell when you are trading Simple Moving Average (SMA) Simple Moving Averages represent an asset’s average price over a given period of time Spike Spikes are relatively large, though short-lived, positive or negative movements in price action. Spot rate In Forex trading the spot rate is the current rate at which a given currency pair can be bought or sold Spread The difference between the bid and offer Stochastic oscillator Is an indicator used in technical analysis to track bullish and bearish divergences, as well as oversold and overbought conditions Stock Also known as a share or equity, a Stock is a tradable security which grants the purchaser ownership of a fraction of a corporation Stop loss An order to close a position at a specified price in order to limit losses Support level Support is the level at which the market finds a floor which is difficult to penetrate through Swap The interest either paid or earned when you rollover a trade overnight Swing trading Swing Trading is a relatively short-term investment style that attempts to capitalize on short-term trends that may last for up to several days Swissy The Swissy is the market nickname for the Swiss Franc (CHF) Take profit An order to close a position at a given price in order to realize the profit Technical analysis The art of looking at charts and analyzing patterns and trends to predict future price movements. Because Technical Analysis involves a lot of looking at charts, traders who use it are often referred to as ‘chartists’ Trade balance An economic indicator that tracks the monthly changes in the difference between the value of goods and services imported and exported Trailing stop Trailing Stops are dynamic stop-loss orders that react to changes in the underlying price Trend A Trend is the prevailing direction that a certain asset or market is moving in Trend line Trend Lines are drawn beneath uptrends and above downtrends to mark their respective support and resistance levels Variable currency The currency at which a price fluctuates against. For example, USD is the variable currency in the EURUSD currency pair Volatility Volatility is a measure of how rapidly prices are changing over any given

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Why is it that CFD Futures charts on MT4 only go back a short period of time?

Given CFD Futures contracts expire either monthly or quarterly, you can only go back and view the price movement history of a current CFD symbol from the time it started

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Why was my Take Profit not executed?

A Take Profit is usually not executed for two possible reasons: 1. When there is not enough liquidity in the market to fill your order. As you may already know, a Take Profit is a Limit Order and by nature it cannot be executed at a worse price. However, when the market is extremely volatile or/and there is thin liquidity at the time of execution, it is possible that your order will be partially executed or not executed at all. This is rare because it mostly concerns larger trades and happens during illiquid times. It is possible though to affect smaller trades if there are abnormal market conditions. 2. The market is yet to reach your Take Profit Level (even though you can see the price on the Chart). In this event, your order must be a Sell Order. Sell Orders open on the BID price and close on the ASK price. Having said that, it could be possible that you can see your TP level on the Chart, but the ASK price was higher at that time. To find the ASK price, you must add the spread that existed at that time, but in all cases, the ASK price will be higher than the BID price. An easy way to identify the ASK price based on what you see on a Chart is by adding the average spread. This will give you an indication, whether the ASK price hit your TP or

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Why was my Buy Limit Order not executed?

The most obvious reason would be the Spread. As you may already know, Buy Orders open on the ASK price while Sell Orders open on the BID price. What you see on the Chart, is the BID price and even though your Buy Limit Price might be visible on the chart, it doesn’t necessarily mean that the ASK price has also reached that level. To find the ASK price, you must add the spread that existed at that time, but in all cases, the ASK price will be higher than the BID price. An easy way to identify the ASK price based on what you see on a Chart is by adding the average spread. This will give you an indication, whether the ASK price reached your Buy Limit level or not. You can find our Average Spreads

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Why was my swap charged higher than the daily rate shown on the website?

A Swap is a fee for keeping a position overnight. It represents the difference in credit interest rates for currencies used in trades, therefore Swap rates may vary from time to time depending on the rate. The triple Swap, or 3-day Swap occurs on Wednesdays, because most instruments need two business days (T+2) to be settled (for all the financial transactions to be completed). If you roll the Wednesday position over to Thursday, the Swap rate will also account for rolling the position over the weekend – thus the triple rate. You can check out how Swaps are calculated, per instrument,

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How do I calculate pip profit & loss?

Every pip movement – whether up or down – will result in a profit or loss (P&L) – depending on the direction of your trade. P&L per pip is calculated based on the counter currency since you’re always trading your base currency against it. If you’re buying EUR against the USD, any profit or loss from your trade will be based on the conversion rate of EUR to USD. So, the P&L for this trade is converted to USD terms in real-time. The P&L of a pip is always based on the size/volume of the trade and size of the pip. Let’s take an example: Pip profit/loss = Trading volume x pip size So when calculating for the EURUSD: 1 pip = 100,000 x 0.0001 = USD 10 This means that if you’re trading with a volume of EUR 100,000, each pip up or down in the price will result in a USD 10 profit or loss. Check out our Forex Trading Calculators for

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How is margin level calculated?

The Margin Level is calculated as follows: Margin Level = (Equity / Margin) x 100% When an account reaches or drops below a certain level, it gets stopped

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How does Stop Loss work?

A Stop Loss is a Market Order that helps limit an investor’s losses. When you attach a Stop Loss to one of your trades, you basically give instructions to close the trade once it reaches a certain price. Example: You buy a Stock at the price of $100. By attaching a Stop Loss at the price of $80, you basically instruct the system to close your order once the price reaches that price. Attaching a Stop Loss to your trades is the most efficient risk management tool to cut losses when you don’t have the ability to constantly monitoring your

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How do I trade currencies?

Trading currencies is simply the buying of one currency and selling of another. OneRoyal offers what is called Margin FX products – which means we offer trade on the price movements of the forex market, where your profit or loss is a cash adjustment on your platform – not physically delivered. When you see a certain currency as ‘cheap’, you can buy that currency in relation to another; you’re anticipating it will increase in value, after which you can sell it again. This also works – but the other way – if you consider the currency to be ‘expensive’. Currencies are traded in pairs. The first currency in the pair is called the Base currency; it’s the one you’re either buying or selling. The second currency of the pair is the Counter currency that you’re trading the base currency against. For example, when you buy the EURUSD, it means that you’re buying EUR and selling USD. So, if the EURUSD is currently trading at 1.1078, this means that every euro is equal to USD 1.1078. If you’re anticipating an increase in the value of the EUR – in relation to the USD – you can execute a Buy order at 1.1078, and buy EUR by selling USD. Let’s assume the price of the EURUSD increases to 1.1098; it means that every euro is now equal to USD 1.1098 and you’ve made a profit. However, if, for example, the price of the EURUSD decreases to 1.1067, this would mean that every euro would now be equal to 1.1067 USD; hence, losing money. The most traded currency pairs are USD, EUR, GBP, CAD, CHF, JPY, AUD, and

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