Q. Let's say I have $10,000 in my account and try to sell 100EUR. If it's that you're change some of your dollars to EUR and then selling it, you end up having the same $10,000 in your account.
If it's that your broker uses EUR he already owns, then how can I calculate the margin in this case?
And if you know any sites where I can learn these basics in detail please let me know.
Thank you in advance.

Answer
There's no conversion or change to anything in your account.

I trade the forex spot market (cash market), which is what you're referring to, but I also trade forex futures. Very similar, and easier to explain. Think of the EUR/USD pair as a commodity, like oil or gold or the Dow futures. With any of these futures contracts, you are betting on the change in price. There is no change or conversion to the commodity in your account.

The EUR/USD measures the exchange rate between the Euro and the US Dollar. Right now, it's at 1.3300. You are simply betting on the rise or fall of the EUR/USD pair; the change in the exchange rate. For every point change in the pair, you make/lose $12.50. If you go long the pair, and it rises 10 pts, you make $125.

The margin requirement for futures is going to vary between brokers, but for me it is $500/contract. Commission charge is $5.72 round trip. I get better fills with the futures, and futures are regulated by the SEC, while the forex spot market is run by the banks; unregulated.

http://www.ampfutures.com/index.php

Now, I'm going to switch back to the forex spot/cash market, so don't let me confuse you. Following is info about the forex cash market (not futures)

1.EUR/USD - Euro/U.S. Dollar
2.GBP/USD - Great British Pound/U.S. Dollar
3.USD/CHF â- U.S. Dollar/Swiss Franc
4.USD/JPY â- U.S. Dollar/Japanese Yen
5.USD/CAD â- U.S. Dollar/Canadian Dollar
6.AUD/USD - Australian Dollar/U.S. Dollar
7.EUR/GBP - Euro/Great British Pound
8.EUR/JPY - Euro/Japanese Yen
9.EUR/CHF - Euro/Swiss Franc
10.GBP/CHF - Great British Pound/Swiss Franc
11.GBP/JPY - Great British Pound/Japanese Yen
12.CHF/JPY - Swiss Franc/Japanese Yen
13.NZD/USD - New Zealand Dollar/US Dollar
14.EUR/CAD - Euro/Canadian Dollar
15.AUD/CAD - Australian Dollar/Canadian Dollar
16.AUD/JPY - Australian Dollar/Japanese Yen
17.EUR/AUD - Euro/Australian Dollar

NOTE: Of the above 17 currency pairs, six of them are deemed the âmajor currency pairsâ in the FOREX market because they account for about 80 percent of FOREX transactions:
1.EUR/USD - Euro/U.S. Dollar
2.GBP/USD - Great British Pound/U.S. Dollar
3.USD/CHF â- U.S. Dollar/Swiss Franc
4.USD/JPY â- U.S. Dollar/Japanese Yen
5.USD/CAD â- U.S. Dollar/Canadian Dollar
6.AUD/USD - Australian Dollar/U.S. Dollar

As you can see, there is a currency on the left and one on the right. The one on the left is referred to as the base, and the one listed on the right is known as the cross. The format, once again, is as follows. BASE/CROSS, or EUR/USD. The EUR is the BASE and the USD is the CROSS.

TERMINOLOGY:
â¢PIPS- Price Interest Point. This is the smallest unit price for any Foreign Currency.
â¢LOT- A lot of currency is one denomination for a trade (100K or mini account). This is similar to purchasing one stock or one contract in the futures market.
â¢LONG to buy
â¢SHORT to sell
â¢BID-The price at which you sell
â¢ASK-The price at which you buy

Price Interest Point - (PIP)
Profits are made in the FOREX by gaining PIPS. A pip is the last digit from the decimal point. This value is 1/100th of a cent. You may now be asking yourself, how do I make money off of 1/100th of a cent? The answer is leverage. The FOREX market is highly leveraged and should be respected. That said, it can also provide for a tremendous return on your investment. The average leverage in the FOREX is 100 to 1. Basically this indicates that for every dollar you invest in a trade you are controlling $100 of value.

Calculated PIP
Calculated PIP â shows the Price Interest Point (PIP) value for the selected currency pair based upon your trading account margin. For example, a standard 1 percent margin trading account controlling $100,000 in currency would show the EUR/USD with a PIP value of 10.

PIP VALUE-Fixed or Floating
FIXED- When the USD is the cross currency (right side of the pair), the PIP value is fixed at $10 in a 100k account.
FOATING- When the USD is the base currency (left side of the pair), the PIP value is based upon the exchange rate of the cross currency (i.e., USD/CAD.). Also, the PIP value is floating when the pair consists of foreign currencies (i.e., EUR/ GBP).

LOT
A lot is the normal unit of trading in the FOREX market. Trades are made in lot increments, similar to share increments in the stock market.
Standard (or 100k) FOREX account- has a 100:1 leverage ratio
1 LOT= $1,000 investment= ratio leveraged 100 to 1, which = $100,000 in buying power.
Mini FOREX account- has a 200:1 leverage ratio
1 LOT= $50 investment= ratio leveraged 200 to 1, which = $10,000 in buying power.

I am a 16 year old, wondering if I could invest in the stock market?

Is FOREX trading better than stock trading?
How risky are they?

Answer
Check with some brokers to see what are the requirements/restrictions for a minor for trading. I won't say you can not, but I'm sure there are going to be several restrictions at minimum since you are in fact a minor.

I personally think FX is better. Why?

-The average daily dollar value traded on the NYSE is about $35-$40 billion, while the FX market avearges $2 trillion per day conservatively (they think it's actually more like $6 trillion per day).

- There are something like 1700 issues on the NYSE alone and around 40,000 worldwide, while in the FX there are 6 major currency pairs (there are more than that when you take the cross currency pairs, but the majority of trades happen in the 6 majors).

- Trades 24 hours a day. FX opens around 5pm EST on Sunday and doesn't stop till around 4 pm EST Friday.

- No commissions. The dealers make their money on the spread, which came be as little as 1 pip, depending on the currency pair.

- No restrictions on short selling, while in equities you have the Short sell rule, ie, you can only short on an up tick or zero plus tick.

- Higher leverage. Equities only offer 2:1 leverage, while in FX you can get as much as 400:1, depending on the broker. But beware, leverage is a double edge sword. As fast as you can make money with high leverage, you can also lose it just as fast.

- Demo accounts. One of the things I like about FX is their demo accounts. You use the exact trading platform that you'd use to execute real trades, but you're using fake money. It trades like the real thing so you get a great feel for how trades actually work.

There are other advantages of FX, but I can remember them all.

Now, what you must remember is that FX is MY preference. It doesn't mean it's better than equities, it's just that I prefer FX to equities. You must do your own due diligence to find out which one is better for you.

Many people mistakingly will say 1 investment is better than another. That's an erroneous way of thinking about it. The way that should be thinking about it is which investment is a best fit for the individual in question. A person with a low risk tolerance level's best fit would be in things like CD's and such, but a person with a high risk tolerance level would be a better match with FX or derivatives.

Only you can figure out which one is best for you, your personality, risk tolerance levels, temperment and goals. Best of luck in your quest.