Contents
Lesson 2 of 24, 3 min video

One trade from start to finish

We take the trade from the previous lesson apart: what an option, expiry and payout are, where the trade terms are in the program and how the result is calculated.

  1. Video
  2. Trainer
  3. Check

The trade from the previous lesson

In the previous lesson the program opened a trade, and a minute later it closed with plus 90 cents. Now we take this trade apart: what it is made of and how the result is calculated.

An option: higher or lower

An option is a trade with two outcomes: the price at the end of the term will be higher than the opening price, or lower. The term is set in advance and is called the expiry. When it runs out, the trade closes by itself, and the broker compares the closing price with the opening price.

Buy
A trade on the price going up. It wins if the closing price is higher than the opening price.
Sell
A trade on the price going down. It wins if the closing price is lower.

The trade terms in the program

The lesson uses a training market, a Pocket Option test account and the symbol GBPUSD, trading is running. The trade terms for the symbol are on the Parameters tab.

Trade Amount
1 dollar.
Buy and Sell
Allow trades on the price going up and on the price going down. Both are on, and the program picks the side by itself: by the direction of the jump.
Expiry
1 minute.
Payout
The broker sets it. It is written next to the symbol name: 90%.

The trade in the history

On the chart the fast price went up, and the program opened a trade on the price going up. A row appeared in the trade history, and the balance went down by 1 dollar: that is the trade amount.

Time and Symbol
On the left: the opening time and the symbol.
Dir
CALL.
Amount
1 dollar.
Impulse and Gap
How far the fast price moved and how far the broker lagged behind it.
Open RTT
How many milliseconds it took the trade to open at the broker.
Result
While the trade is running: Pending.

How the result is calculated

The payout on this symbol is 90%, the trade amount is 1 dollar.

The trade won
+$0.90: the broker returns the dollar and adds 90 cents to it
The trade did not win
$1.00: the trade amount stays with the broker

Each win brings less than the trade amount, so it matters what share of trades win. The program shows this share in the tab header.

The trade has closed

A minute has passed. The closing price is higher than the opening price, and the trade has won.

  • The result says Win, the profit is plus 90 cents.
  • The time has changed to the closing time.
  • The balance grew by 90 cents, and the header now shows the share of wins.

What to remember

  • An option closes by itself when the expiry runs out.
  • Buy wins if the closing price is higher than the opening price. Sell, if it is lower.
  • A win brings the payout as a percentage of the amount, otherwise the trade amount stays with the broker.

Trainer: how the trade ends

Set the trade amount, the payout and the direction, choose where the price ends at expiry and see the result. Below: how the share of wins changes the total of a series of trades.

GBPUSDPayout 90%
openingclosingexpiry 1 minute
Trade History
Direction
CALL
Amount
$1.00
Payout
90%
Result
Win
Profit
+$0.90
Balance
before the trade
$10,000.00
after opening
$9,999.00
after closing
$10,000.90
Win: +$0.90

Buy wins if the closing price is higher, and so it is. The broker returns the $1.00 of the trade and adds 90% of it: $0.90.

Trade amount
90 %
Direction
Closing price

The model is simplified: all trades have the same amount and the same payout. A closing price equal to the opening price is left out.

A series of 10 trades

Each win brings less than the trade amount, so the total depends on what share of trades win.

Series total: +$1.40

At a payout of 90% a series of 10 trades ends above zero if at least 6 won.

6 of 10

Check yourself

Questions on the lesson. You can change an answer.

  1. A Buy trade, the expiry is 1 minute. When does it win?

  2. The payout is 90%, the trade amount is 1 dollar. What does the broker do if the trade wins?

  3. Who sets the payout?

Next lesson: when the program enters and when it waits

The program does not open a trade on every price move. We will see when it enters and when it waits.

Open the next lesson