VOLUME:
Volume is measuring the number of trades in particular period of time. Simply the number of trades (buy and sell) executed in a period of time. Volume is one of the most important element in forex . In peak period volume will increase drastically compared weak period.
TRADE SIZE:
Trade Size in forex means the size of the trade that you want to execute, simply how many units you want to buy/sell in a particular trade is TRADE SIZE. depending on the size of the trade the names are derived. In general size is represented in LOTS.
1 STANDARD LOT or 1 LOT
1 MINI LOT = 0.10 LOTS
1 MICRO LOT = 0.01 LOTS
1 STANDARD LOT of trade requires more than 100 thousand dollars
1 MINI and MICRO LOT trade also requires thousands of dollars.
Then how does small traders and investors are trading? LEVERAGE is the answer; brokers provides leverage to the costumers and that leverage is also in very big ratio 1:1 to 1:1000, one can select the leverage ratio while creating their account with broker.
LEVERAGE:
Leverage can be simply explained as borrowing some amount of money from the broker to meet the required volume for a trade. Let’s have an example.
If you account leverage is 1:100 and you have 100 dollars in your account, if you want to buy eur/usd then the marginal amount and free margin and the borrowed amount will be calculated like this.
Today eur/usd price is 1.13249
1.13249 x 100 = 1132.40
You need minimum of 1133 dollars to buy a 0.0.1 lot sized trade and you should have some more money in your account as free margin to save your trade, with 100 dollars account how you could purchase 1132 dollars trade. Leverage helps you in buying
Your Leverage = 1:100
You will give 1 dollar and the broker gives you 100 dollars, for 1132 dollars you have to give 11.32 dollars then brokers gives the remaining amount.
100-11.32=88.68
Your margin is 11.32 and the free margin is 88.68 account balance is 100.
Now, Equity = margin + free margin
MARGIN:
The amount you need to put in a TRADE from your balance. It is stable value which doesn’t changes till the trade is stopped out
FREE MARGIN:
Free margin is the available amount after deducting margin from the balance. It is dynamic it moves along with the price, if price moves in your favor it will increase by adding the profit or if price moves opposite to your trade it adds the loss and decreases.
EQUITY:
Equity is obtained by adding margin and the free margin, it is also dynamic value.