What is Flight?

A lot is a transaction of 100,000 units of the base currency. Thus, entering into a transaction to buy 100,000 USD/CAD will buy 1 lot. There are also: minilots (1/10 of a lot), microlots (1/100 of a lot) and nanolots (1/1000 of a lot). We also talk about lots in the case of assets other than currencies – in these cases, however, the size of the lot is determined individually for different contracts.

 

What is the base currency?

A base currency is one that is listed first in a currency pair. For example, when buying dollars for zlotys – the currency pair USDPLN – the base currency in this case is the US dollar.

What does the size of a lot position mean?

The size of a position in lots is really just the amount of base currency that was acquired in the opening of a position. So, for example, a position of 1 lot size means that 100,000 units of the base currency were purchased. A micro lot, therefore, simply means the purchase of 1,000 units of the base currency.

Which flight for novice investors?

Lot size, or the amount of base currency to be bought for novice traders, really depends on the capital we want to invest. Keep in mind that our position should not be more than a few percent of the value of our assets in the brokerage account. It is also important to note that although few novice investors can afford to buy an entire lot (100,000 units of currency), after all, in the case of the Forex market we have leverage at our disposal, which makes this much easier. Of course, in the most general assumption, it should be assumed that a trader who is just beginning his adventure with Forex should rather choose smaller positions than the whole lot.

How to calculate profits on flights?

To calculate our profit on an open position, we need to subtract from the price at which a unit of currency can be sold, the price at which we purchased the unit, and multiply by the number of units held. This will give us the total profit that closing an already open position can generate for us.