NZDJPY – SELL – 10th June 2021

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Good morning team,

We are turning our attention to the NZDJPY as there has been a breakdown from a long term rising trend line support followed by a bearish divergence on the weekly time frame.

NZDJPY Weekly Charts

The weekly charts are painting a very nice reversal opportunity. Key resistance at 79.60, bearish divergence and a trend line break down.

NZDJPY 4 Hour Charts

Trade Setup: SELL market execution, current price 78.61, stop loss 79.61 and take profit targets 77.00-75.70. 

Stop loss: 100 pips

Take profit: 161-291

EURUSD – BUY – 7th June 2021

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Good evening team,

 

A very tricky week trading the USD as there was a number of conflicting economic data points. The main takeaway from last week’s data is the US labour market is further away than what the FED is looking for before they consider bond tapering. Therefore we see the potential of a weaker USD playing out this week. Especially when you look at the current structure of the DXY in the latest technical analysis I posted earlier today (check USD technical analysis). The structure is in 3 waves which is a correction rather than a trend. Therefore the DXY should continue the overall trend to the downside.

EURUSD 4 Hour Charts

EURUSD 1 Hour Charts

Based on Elliott wave theory, corrections are made up of 3 sub-waves labelled ABC. The EURUSD appears to have completed the corrective structure and should resume towards the 1.2350 resistance.

 

Trade Setup: BUY market execution, current price 1.2162, stop loss 1.2092 and take profit 1.2350.

Stop loss: 70 pips

Take profit: 188 pips

Leverage X Margin…

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Leverage & Margin Explained

Leverage

An account with 30:1 leverage means you can multiply your account balance by 30.

For example an account size of $500 X 30 = 15,000 (in available volume).

 

This means you can place a maximum of 15,000 AUD in volume which equates to $1.5 AUD per pip.

 

Position size explained:

 

0.05 volume = 5,000 position = $0.50 per pip

0.1 volume = 10,000 position = $1 per pip

0.2 volume = 20,000 position = $2 per pip

0.3 volume = 30,000 position = $3 per pip

0.4 volume = 40,000 position = $4 per pip

0.5 volume = 50,000 position = $5 per pip

However, remember the volume you use in your position is based on the “base” currency. You will need to convert the volume back into AUD.

Trade Example: 

 

EURUSD BUY – Market price 1.2150 (1 pip = 4th decimal place).

Stop loss = 1.2100 (50 pips difference)

 

If you were looking to risk $50 in the market you would be looking to use a volume of 0.1 which is a 10,000 position in the market. 10,000 position = $1 per pip X 50 pip stop loss which is $50 risk. 

 

However, as you are trading in EUR your position size is calculated in EUR, a 0.1 position is 10,000 EUR. Therefore, if you were looking to risk $50 AUD you would need to bring your position size down to roughly 0.06 which is a 6,000 EUR position, which converts to 9,300 AUD in volume. This will roughly take your risk to $50 AUD when converted.

 

Position size calculator

https://www.myfxbook.com/forex-calculators/position-size

 

Margin 

 

Margin is NOT the cost of the trade, nor is it what you will lose if the trade hits your SL. 

The margin is essentially the amount of money you are required to have in your trading account to place the position. 

 

Trade Example: 

Using the same trade example:

 

EURUSD BUY – Market price 1.2150 (1 pip = 4th decimal place).

Stop loss = 1.2100 (50 pips difference)

 

Using the same position as above (0.6 = 6,000 EURO), the margin requirement is roughly $312. This means you are required to have at least $312 AUD in your account to place this position. Again, this is NOT the cost of the trade. 

 

6,000 EURO = Roughly 9,300 AUD. Therefore you have used just under two thirds of your available 15,000 AUD in volume. This is based on a $500 AUD account with a 30:1 leverage (15,000 available).

 

Margin Call

 

Have you ever heard of a margin call? This is where a hedge fund or bank falls beneath the required equity levels to maintain a position. Essentially, their position has moved against them, and they either need to close down the position, or fund their position to bring their account out of margin call. The bottom line is they run the risk of the position being closed out as they have not got enough equity to cover the margin. 

 

This is the same as a retail trader. If a trade moves against you, your account can move into a “margin call”. This CAN happen even if your SL has not been activated. You may only be risking $100 in the market out of your overall balance, however you may not have sufficient equity to cover your margin requirement. This can result in a trade automatically being closed by the broker. 

 

Margin Calculator

 

https://www.myfxbook.com/forex-calculators/margin-calculator

General rule of thumb:

How to calculate the required position size…

Every one has a different amount of $ they are looking to risk per trade, however the formula is always the same.

$ risk / stop loss distance = $ per pip (in AUD).

Example:

$50 / 50 pips = $1 AUD per pip – Then convert into the “base” currency.

If you have any questions please reach out in the live chat!

All New Trading Floor Members CLICK HERE – Important INFO

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Hi trading floor team,

Welcome to the trading floor, Forex Kings wants you to be as successful as we are trading in the Forex Market.

I am sure you have a number of questions, however, please read through these FAQs before asking in the live chat.

Please keep in mind, Forex is a very high-risk investment, you should not trade with equity you can not afford to lose.

We lose trades, that is part of trading. Understand risk management is the key to success in the Forex market. Forex Kings uses anywhere from a 1% risk to a 5% risk of our total balance.

The amount you chose to risk in the Forex market is solely down to your own discretion.

We highly recommend doing a training period on a demo account whilst you learn. It is better to make mistakes on a demo account rather than your real money.

All positions on this page are setups that Forex Kings are currently trading.

Here are a number of FAQs that you should read through.

  1. Should I close my trade I am in profit? This is entirely down to you when you close your trade, we set parameters for stop losses and take profits. However, Forex Kings also sends alerts out via text message and telegram of when we close out our trades or update our stop loss. Please do not keep asking if you should close your trade. This FOMO mentality is negative for the community. It encourages jumping in and out of positions which is a very bad trading habit.
  2. What is a market execution trade? A market execution is a live trade going in at the current market price. Everyone will have a slightly different entry depending on how long it takes you to place the trade.
  3. What is a BUY STOP, BUY LIMIT, SELL STOP and SELL LIMIT? These are pending trades. We want our trade to be activated at a certain level as the current price isn’t a great entry. Therefore we use a ‘pending order’ to set up a trade at a certain level.
  4. How do I place a trade? Please go to the section on the trading floor that says ‘how to use the trading floor’. There is webinar content that shows you how to place a trade using MT4. Please watch all of the training videos in the trading floor as well. There is an MT4 guide that you can download from your welcome to the trading floor email.
  5. Can I download MT4 on my MacBook? This will depend largely on the broker you have chosen to use. Focus markets offer a MAC version of MT5.
  6. My symbols on MT4 are greyed out and I can not place a trade… Please right-click on the symbols list and select ‘Show All Symbols’. This will show you the symbols you need to trade on. As you are on an ‘ecn’ account you will need to trade symbols with ecn at the end for example EURUSDecn. If you are using the MT4 mobile app please press the + button in the top right-hand corner and select Forexecn
  7. How do I trade Gold and Oil? There is a CFD cheat sheet in the trading floor. This will teach you how to calculate position sizes on CFDs
  8. I am having trouble working out position sizes… Most of our new members use an app called ‘Stinu’. Please download this it will give you the correct position for each trade you complete. To get an understanding of position sizes, please open a demo account to get some practice under your belt.

Any further questions please jump into the live chat, or book a call using the book a call feature in the trading floor.