How To Participate In Cryptopedia’s Forex Signals
A forex broker works as an intermediary between you and the interbank system. If you don’t know what the interbank is, it’s a term that refers to networks of banks that trade with each other.
Typically, a Forex broker will offer you a price from the banks of which they have lines of credit and access to forex liquidity. Many forex brokers use multiple banks for pricing, and they’ll offer you the best one available.
Fxpro.co.uk is a great and interface friendly broker to use for our forex signals because they offer spread-betting, which is tax free, and their spread-betting app is clean and easy to use.
To get an account with a forex broker such as Fxpro, it’s similar to opening a bank account. It requires paperwork and steps such as identity verification. The whole process takes a few days, but the forms are easy to fill out.
However, if you’re just looking to test the waters, forex brokers offer demo accounts for which you only need to provide minimal information to open. A demo or practice account allows you to get set up and get some practice trading until you’re ready to get started trading with real money – If your taking our signals you will need to sign up to a real account.
What Is Leverage?
Leverage comes with every account, and it varies in an amount anywhere from 1:1 to 100:1. A 10:1 leverage means that for every £1 in your account, you have £10 to trade.
Do we recommend leverage? NO, not for an inexperienced trader.
Leverage is both good and bad as you can make exponential profits, but you can also suffer from mounting losses. The law requires forex brokers to disclose this, and they typically do in fine print. New traders usually get excited and blow their accounts out quickly if they jump in too fast.
What is Margin?
The margin is the amount required to have as “extra” balance in your account to ensure that you can enter trades with a reasonable PIP value. You need to cover this margin, but you don’t need to risk it. This is explained in the example below.
Spread-Betting With 1:1 Leverage On FxPro
When spread betting, rather than placing lot sizes, you place a £ value per PIP (percentage movement in price) so you know exactly how much your stop loss and take profit will be ahead of time. Take a look at the below example from the Fxpro Spread-betting App. (Fx Pro Edge) found on the App Store, or downloadable from FxPro’s website.
- This is trading EURUSD
- The “Stake” is the amount in £ or which ever base currency you have that you place on one PIP’s movement
- The “Margin Requirement” represents a minimum amount that the account must have in order to execute an position of a certain valued “Stake” – the example above is using a £500 deposit as an example (however this £500 is not at risk, If you only wanted to risk a maximum of £100 for the 1 month forex signal subscription package) – I will explain this after going through the order form above.
- Ticking the Stop Loss and Take Profit boxes will bring up the two boxes below it.
- Here you can set the number of PIP’s for each. – our signals provide you with the stop loss price and the take profit price and the PIP amount for each the stop loss and take profit, so you can enter the PIP values to match the stop loss and take profit values given.
- The right-hand side box is the take profit PIP field.
- After entering the stop loss PIP’s, you can see here the loss value in £ (determined by the “stake” you place on each PIP).
- Again, this is the take profit value in £, in the example above we’ve used the lower end of our set up take profit PIP amounts, they usually range from 100-250 per trade.
- This shows the percentage loss of your account
- And this shows the percentage gain on your account from the trade set up.
As you can see, a £500 deposit with £0.30 “stake” value per PIP would result in a potential £9 loss, and a potential £30 gain (though usually we will make 200 PIP’s per trade), hence it would usually be £60 profit from one trade, risking only £9.
Will I lose my £500 deposit?
- The example above has been planned out for someone who is willing to risk losing £100 over a total of 11 trades.
- Our trade win rate here at Cryptopedia is 80%, i.e. the setup ups that we give you are 80% of the time winners.
- Because this example of “willing to lose £100” enables you to take 11 trades before the £100 is gone (bringing your balance down to £400) but our signals win 80% of the time, with small stop loss’ PIP values, and high take profit PIP values it is extremely unlikely that you will lose 11 trades on the run, near impossible if you follow our guidance correctly and manage the risk profile above £0.30 per PIP (with a £500 deposit, and the willingness to lose £100 in total)
- If you lose 11 trades on the run, and your balance is now £400. Then you have given what you can afford to lose, so withdraw the remaining £400 (we’re sure this wont happen, but that’s the best advice to give)
In order to cover the expense of your monthly signals (we give multiple trade set ups every week) the first £50 profit trade you make, withdraw those profits to cover the expense.
From this point on, your month of signals continues, and you still have £100 to risk.
Compounding simply means that as you continue to make profits you increase your account size, for example if you started with £500, willing to lose £100, but the first month your up £500, then your total balance now will be £1,000. At this point, even though you have made £500 profit, you may wish to risk only £200, which would mean rather than staking £0.30 per PIP, you’d stake £0.60 per PIP)
The more money you have, the more you can trade with “stake” on PIP value, with our same 80% win rate trades.
For example, now that you have reached £1,000 you can increase the “stake” to £0.60 per PIP, doubling both your risk (it would now be £18 per trade), but also doubling your reward when the take profit is hit (it would now be £60 if the take profit is on the lower end of 100 PIP’s) or more likely £120+ per trade, with 200 PIP take profit targets.
This process of compounding continues and continues until you will have a large account size making hundreds if not thousands per trade whilst still maintaining proper risk management with the proportional increments in PIP “stake” value.