We take the trade from the first lesson apart: what the price, the spread, a point and a lot are, and how they produced the result of +0.27.
In the previous lesson the program bought and a second later closed the trade. The journal kept a record: P/L +0.27, that is, plus 27 cents. Let us see where they came from.
Along the way there are four words you cannot do without later: price, spread, point and lot.
The program traded gold, in the program it is written as XAUUSD. At a broker gold trades the same way currencies do. The price shows how many dollars one ounce of gold costs; an ounce is about 31 grams. In the lesson it is 3652.46, that is, about 3,650 dollars.
A broker, like an exchange booth, has two prices. You buy at the higher one and sell at the lower one. The difference between them is called the spread.
The spread is what you pay the broker for the trade. What you bought can only be sold at the lower price, so a trade moves into profit once the price has travelled more than the spread.
The price is written with two digits after the decimal point: dollars and cents. When the last digit changes by one, the price has moved by one point: from 3652.46 to 3652.47. It is the smallest step of the price, and almost everything in the program is measured in points.
The program bought at the broker's higher price.
Both prices, buy and sell, rose after the fast feed.
The program sold at the lower price, which by then was above the buy price.
3652.73 minus 3652.46 is 27 points. That is the profit of the trade, the spread is already counted in it.
How much money the points bring depends on the volume of the trade. Volume is measured in lots. The lesson used the minimum: 0.01 lot, which is one ounce. With this volume one point is worth one cent, so 27 points gave 27 cents.
You can also earn when the price falls. A broker lets you sell gold you do not have and buy it later. If it has become cheaper by then, the difference is yours.
Whether to buy or to sell, the program decides by itself: by the direction of the jump.
In the next lesson we look at how the program decides whether to enter a trade.
Change the price movement, the spread and the lot. The trainer shows the opening and closing prices and the result of the trade in points and in dollars.
The price rose by 38 pt. The spread took 11 pt of it, and the rest is yours.
The model is simplified: the spread stays the same, and there is no commission or slippage. One point of XAUUSD at a lot of 1 is worth 1 USD.
Questions on the lesson. You can change an answer.
Three price jumps: the program buys on the first, skips the second and sells on the third.
Open the next lesson