At LongHornFX we pride ourselves on offering traders a wide variety of tradable assets including Cryptocurrencies.
Digital assets are gaining more popularity by the day as the future of finance looks to shift towards a digital infrastructure.
This has created a feeding frenzy for more and more people purchasing and holding digital assets. With increased popularity comes increased liquidity which makes Cryptocurrencies an exciting CFD trade!
Enjoy up to 1:100 leverage on top Crypto pairs including BTC/USD, ETH/USD, DASH/USD and much more.
To get Cryptocurrencies to appear in MT4
1 Right-click anywhere on the ‘Market Watch’
2 Click ‘Symbols’
3 Click ‘Cryptos’
4 Then you will see all available Crypto pairs
5 Select ‘Show’ or ‘Hide’ to add and remove from your Market Watch
Leverage allows traders to open larger positions with less capital. Trading with leverage is considered to be one of the main benefits associated with CFD trading to maximise earning potential.
This provides traders with the opportunity to generate greater profits from even the slightest market movements. In the Forex market, for example, price movements are often quite small, so forex traders may use leverage to amplify their profits from changes in currency pairs.
With LonghornFX, traders can open positions on a large variety of assets, using the following leverage ratios:
Forex – 1:500
Metals – 1:500
Indices – 1:200
Energy – 1:200
Crypto – 1:100
Stocks – 1:20
What is a Margin?
The Margin is the amount of money needed to open a position with leverage. A 1:500 leverage setting means that for every $1 that the trader inputs, the position size is amplified to $500. So, if a trader wants to open a position of $10,000 on the GBP/USD currency pair using leverage 1:500, the required margin will be $20.
In CFD Trading, the spread is the difference between the ‘bid’ and ‘ask’ price of an asset.
In the Forex market, the spread is measured in PIPS. When trading other assets such as Stocks or Commodities, the spread is simply calculated as the difference between the ‘buy’ and ‘sell’ price of the underlying asset.
In this example, we will look at the EUR/USD currency pair.
1.18364 is the price at which you can buy the Euro
1.18356 is the price at which you can sell the Euro
To calculate the spread, subtract the bid price from the ask price. In this case, the spread is 0.00008 (1.18364 – 1.18356).
Factors that Influence the Spread
The two main factors that can impact the spread are Liquidity and Market Volatility. As a rule, spreads are usually affected in this way:
Higher volatility means higher spreads
Higher liquidity means lower spreads
It’s important to bear in mind that the spread is constantly changing due to these two factors, and spreads vary depending on the asset and market being traded on.
Forex is considered to be the largest and most liquid global market, carrying higher leverage options up to 1:500. The highly volatile Crypto Market, on the other hand, has a leverage cap of 1:100. Read more about leverage here.
When trading CFDs, position sizes are based on ‘lots’. A ‘lot’ is the standard number of units of the underlying asset which is being traded. Lots vary depending on the markets that a trader wishes to be involved in.
The value of a lot is set out by the broker and is the minimum number of units that you can buy of any given financial instrument.
You can check the number of units within MT4 by:
Right clicking on the instrument within the ‘Market Watch’
Go to ‘Specification’
See ‘Contract Size’
A lot refers to any financial instrument or tradeable asset on the xxxxx platform, however, the ultimate size and value of a lot will vary between markets.
Micro lot trading allows traders on LonghornFX to trade with a fraction of the contract size also known as micro lots which start at 0.01. The maximum lot size at xxxx is 1,000.
The standard contract size for assets in units:
What is 1 Lot in Forex and how does leverage impact its calculation?
If we use AUD/USD currency pair as a case study, this instrument would contain a contract size of 100,000 units.
1 lot would be equal to $100,000
By using a leverage setting of 1:500 a trader would need $200 in their account to open a position. This is calculated as follows:
100,000 contract size / 500 leverage = $200 required balance to trade 1 lot
If we were to lower the leverage setting to 1:100 for the same pair AUD/USD the calculation would change:
100,000 / 100 = $1,000 required balance to trade 1 lot
BITs and Satoshi are two denominations of the popular Cryptocurrency Bitcoin (BTC). Just as fiat currencies are broken down into whole units and subunits, such as Euros and Cents, Bitcoin can be distinguished as BITs and Satoshi. The value of BITs and Satoshi are as follows:
1 BIT (or Microbit) = BIT = 0.000001 BTC – 1 millionth of a Bitcoin
1 Satoshi = SAT = 0.00000001 BTC = 1 hundred-millionth of a Bitcoin
A Microbitcoin, or ‘BIT’ is one-millionth of a Bitcoin. These can be referred to as BITS or through the symbol μBTC. Satoshi is the smallest denomination of Bitcoin (one-hundred millionth of 1 BTC), named after the pseudonymous creator/s of Bitcoin.
Why do we use BITs?
BITs are often used to display funds in online trading accounts. If you open an account using Bitcoin as a currency, displaying your funds in BITs will make it easier and simpler to view. This is because BITs usually show less decimal numbers than Bitcoin.
For example, if you deposit 0.00085 BTC in your account, this will be displayed as 850 BITs in your wallet.
Other Denominations of Bitcoin
There are other denominations of Bitcoin, although these are less commonly used and will not appear on your trading account. These include
A Percentage in Point, usually called a ‘PIP’ in trading, represents the price movement in a currency exchange rate. A PIP is a very small measure of change in a given currency pair, and is measured and presented as a quote.
Most currencies are quoted to the 4th number after the decimal point, and a PIP represents the last of those numbers. Therefore 1 PIP = 0.0001 of a currency. In an exception to the rule, all Forex pairs containing JPY are only quoted to the second decimal number. So in USD/JPY, 1 PIP = 0.01 of the given currency.
Why are PIPs Important?
Even though PIPs represent a very small movement in price, a slight change can result in large price swings when trading Forex with high-leverage. Since PIPs are small in value, Forex is traded using micro lots, mini lots or lots, representing 1,000, 10,000 or 100,000 units of the currency being traded respectively.
There are three things that determine the value of a PIP:
The currency pair being traded
The size of the trade
The exchange rate of the currency pair
For example: GBP/USD
If the current market price of GDP/USD is 1.30000 and you have opened a micro lot trade with 1000 units of the currency, the value of one PIP will be calculated as follows:
(1 PIP/exchange rate) x lot = PIP value
(0.0001/1.30000) x 1000 = 0.0769
Therefore, for each movement of 1 PIP, the trader would earn or lose 0.0769 Pounds.
Fractional PIP Pricing
To make price quotes more accurate, LonghornFX also includes a 5th decimal place in Forex currency pair prices. This is called a ‘Fractional PIP Price’, which is valued at 0.00001 of the quoted currency. Fractional PIPs are used to provide traders with more precise quotes for price fluctuations.