MT5 for Forex Beginners: Quotes, Points, Lots and a First Demo Trade

Trading forex on MT5 takes five moves. Link the platform to a broker account, pick a pair such as EUR/USD, type a volume in lots, add a stop loss and a take profit, then press Buy or Sell. What you win or lose equals the pips price travels multiplied by what one pip is worth at your size.

MT5 confirms you have the margin for an order. It never asks whether the stop or the size is sensible. A stop ten times tighter than you intended goes through, and so does a volume that bets a big slice of the balance on one idea. Make those slips on a demo account, where they are free, before real money is involved.

MT5 is the screen; the broker holds the money and fills the orders

Forex is the swapping of one currency for another.

MetaTrader 5 is a piece of software and nothing more. A broker keeps your deposit, supplies the prices you see and carries out your orders. The order of steps is therefore fixed: pick a broker that supports MT5, open and fund an account there, and log in to it from the platform. There is no way to trade on MT5 without a broker. Money moves in and out through the broker's client portal, not through a chart.

Roles in MT5 forex trading: the platform displays prices and passes orders on, the broker keeps the deposit and fills tr

Every trade is placed on a currency pair, for example EUR/USD. Buying (going long) makes money when the euro gains on the dollar. Selling (going short) makes money when the euro loses ground. Many brokers offer this as a CFD, which settles in cash on the price difference.

Bid, ask and MT5 points: turning screen numbers into pips

Each symbol carries two prices. You sell at the bid price and buy at the ask price, which is the higher of the two. The difference is the spread, so any new buy opens slightly below zero.

MT5 counts distance in points, the smallest step a symbol's price can take. Most forex symbols quote to five decimals, which makes the fifth decimal a point and one pip worth 10 points. Yen pairs usually quote to three decimals: the pip is 0.01 and the point is 0.001, so ten points still make a pip. Say EUR/USD quotes 1.10000 bid and 1.10010 ask. That spread is 10 points, or 1 pip, as the levels chart below shows with the gap shaded.

EUR/USD on a 5-digit quote: bid 1.10000, ask 1.10010, spread of 10 pointsIllustration

Remember one rule. On quotes with five or three decimals, divide a point figure by 10 to get pips. So "200" means 20 pips, and "20" means just 2.

The rule matters most in boxes that ask for a distance in points instead of a price, such as the trailing stop or the stop-loss setting of many EAs. Enter 20 there thinking it means 20 pips and the stop ends up 2 pips away. That is close enough for the spread alone to nearly reach it. The drawing below compares the two.

Illustrative: 20 points versus 20 pips as a stop under a 1.10000 EUR/USD buy

Lots decide what one pip is worth

You enter volume in lots. 1.00 is a standard lot: 100,000 units, or $10 per EUR/USD pip. 0.10 is a mini lot ($1 per pip) and 0.01 is a micro lot ($0.10). On any pair with USD as the second currency, pip value = units × 0.0001, so the lot you choose sets the value of every pip by itself.

For a first live account, the micro lot suits most beginners best. A 20-pip loss costs $2 there, where a standard lot would lose $200.

Cost of a 20-pip EUR/USD stop on a standard, mini and micro lotIllustration

Standard lot (1.00)

$200 (20 × $10)

Mini lot (0.10)

$20 (20 × $1)

Micro lot (0.01)

$2 (20 × $0.10)

Yen pairs take one more step, because the pip is 0.01 and its value comes out in yen first. As an illustrative example, suppose USD/JPY is at 119.80. A standard-lot pip is then worth 100,000 × 0.01 ÷ 119.80, about $8.35.

Margin is money set aside; leverage is the same rule read backwards

While a trade is open, the broker sets aside part of your balance as margin and releases it when you close. Leverage is the same requirement seen from the other side: leverage = 1 ÷ margin requirement. A 1% requirement is 100:1 and 2% is 50:1. How much leverage you get depends on the broker and the regulator above it.

What a pip earns or costs comes from the lot size, not from leverage. Leverage only changes how much margin is set aside, and with it the biggest position the platform will accept. The drawing below shows the same position at two leverage settings.

One 0.10-lot EUR/USD position at 50:1 and at 100:1: the margin changes, the pip value stays

Market order or pending order: match the order to the plan

Orders on MT5 come in two groups. A market order fills at once at the going price: the ask for a buy, the bid for a sell. A pending order sits and waits, and triggers only when price reaches a level you set. MT5 has six of them: Buy Limit, Sell Limit, Buy Stop, Sell Stop, Buy Stop Limit and Sell Stop Limit.

Two questions tell them apart. Is the level above or below the current price? And do you expect price to reverse there or carry on through? The drawing below places each type.

Placement of MT5 pending orders above and below the current price

Choose by what you mean to do:

• To get in now: a market order.
• To get a better price on a pullback: a limit order. A Buy Limit goes under the current price and a Sell Limit goes over it.
• To get in only after a level gives way: a stop order. A Buy Stop goes over the current price and a Sell Stop goes under it.
• To catch the breakout but buy it on a dip: a Stop Limit. A Buy Stop Limit takes two prices: a stop level above the current Ask and a limit price beneath that stop. Once the Ask touches the stop, a Buy Limit goes in at the lower price, so you buy the breakout only if price pulls back. A Sell Stop Limit is the mirror image beneath the Bid.

A Buy Limit placed above the market is refused as that type. When an order comes back rejected, look at the order type first, fix it, and send it again.

Give every order a stop loss and a take profit. The stop loss is the price at which the trade closes to limit a loss. The take profit is the price at which it closes to bank a gain. The order window expects both as prices, like 1.0980, rather than point distances, unless your platform is configured otherwise.

Worked example: margin, risk and target worked out before you send

All figures in this section are an illustrative example. Say you hold a $1,000 balance and your broker gives 50:1 on EUR/USD. The plan is to buy 0.10 lot at an ask of 1.1000, with the stop loss at 1.0980 and the take profit at 1.1040.

Start by testing the stop against the candles on your trading timeframe. Suppose that is the 15-minute chart. The 15-minute EUR/USD chart below, part of the same example, marks the entry and the stop 20 pips apart.

A 20-pip stop distance compared with 15-minute EUR/USD candlesIllustration

None of those 15-minute candles measures more than 12 pips from high to low, and the lowest low sits 16 pips above the stop. Normal movement on this timeframe doesn't reach it. Rule of thumb: when the stop is tighter than an ordinary candle on your timeframe, widen it and reduce the lot size, or pass on the trade. This 20-pip stop passes, so run these numbers before sending:

Margin, risk and target for a 0.10-lot EUR/USD buy on a $1,000 account

Position value10,000 × 1.1000= $11,000

Margin held at 50:1$11,000 ÷ 50= $220

Value of 1 pip10,000 × 0.0001= $1

Stop distance(1.1000 − 1.0980) ÷ 0.0001= 20 pips

Loss if stop is hit20 × $1= $20

Share of account at risk (%)$20 ÷ $1,000 × 100= 2%

Before you click$20 risk, $40 target, $220 margi

The final line is the sizing formula, and you should use it to pick your lot every time. First decide how much money you accept losing at the stop, then work out: lots = risk in money ÷ (stop in pips × pip value per 1.00 lot). For $20 of risk and a 20-pip stop, that gives $20 ÷ (20 × $10) = 0.10 lot, which matches the plan.

With the trade open, MT5's Trade tab shows Margin, the amount set aside ($220 here), and Free Margin. Free Margin is your equity minus that margin, meaning what is left for further trades. It begins just under $780, because the spread opens the trade slightly negative. When the platform's numbers agree with yours, your sums are correct.

In MT5 units, the stop is 200 points under entry and the target is 400 points over it. A buy closes at the bid, so the bid has to touch 1.0980 or 1.1040. That means the spread is already counted in the outcome.

The worked-example EUR/USD buy: entry 1.1000, stop loss 1.0980 (200 points), take profit 1.1040 (400 points)Illustration

Now look at what margin alone would permit. At the same example prices, 0.40 lot ties up $880 of margin (40,000 × 1.1000 ÷ 50), and the platform accepts it. That same 20-pip stop then costs 20 × $4 = $80, or 8% of the account on one idea. Margin shows the biggest size you can open. The money at your stop shows the size you should open.

0.10 lot vs 0.40 lot on a $1,000 account: margin set aside and money lost at a 20-pip stop

Placing the example trade on MT5, desktop or phone

Run it on a demo account the first time. Use the trade from the worked example: buy 0.10 lot of EUR/USD, stop loss 1.0980, take profit 1.1040.

Desktop:

1. Get a demo account. Register with a broker that offers MT5 and sign the platform in to that account.
2. Locate the symbol. Ctrl+M brings up Market Watch, where you find EURUSD.
3. Open the order window. Double-click EURUSD, or press F9, to open New Order.
4. Confirm the symbol. Check that the window shows the pair you intend to trade.
5. Type the volume. Enter 0.10.
6. Pick the order type. Market Execution fills immediately. Pending Order waits for your level. Brokers set the execution mode per symbol, so the first option may have a different name on your account.
7. Enter the stop loss and take profit as prices. Type 1.0980 and 1.1040.
8. Press Buy or Sell. Here it is Buy, which fills at the ask.
9. Locate the open trade. Ctrl+T opens the Toolbox, where you pick the Trade tab, or Ctrl+F9 jumps straight there. The position appears with its floating profit or loss.
10. Close it when you are finished. To exit before the stop or target, close the position from that tab. The result then appears in the History tab.

Phone:

1. In Quotes, tap EURUSD.
2. Tap Trade to reach the order screen.
3. Set the volume to 0.10, the stop loss to 1.0980 and the take profit to 1.1040.
4. Tap Buy.
5. The Trade tab shows the position, and History shows closed results.

Missing a button you saw in a tutorial? Check the execution mode. Which order buttons appear, and what the first order-type option is called, depend on the broker's execution mode, which is set symbol by symbol. MT5 has four:

Swap: read the contract specification before an overnight hold

If a position is still open at the broker's daily rollover, the broker debits or credits a swap, an interest adjustment based on the rate gap between the two currencies. Whether it charges you or pays you depends on the pair and the side you hold.

MT5 lets a broker give each weekday its own swap multiplier, so a single day can carry several days of swap. Before holding past rollover, open the symbol's contract specification. Read swap long and swap short, and note which weekday carries the bigger charge. Close before rollover and no swap applies.

Beginner mistakes that empty accounts, with a fix for each

• Targets barely wider than the spread. When the target is only a few pips off, the spread swallows much of it. Check the quoted spread against the target before you enter.
• Going live before the sums are second nature. Stay on demo until margin, pip value and the money at your stop come to you without effort.

FAQ