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I am new to Forex trading and not familiar with the Jargon and principles but this is what I have in mind which I will explain the best I can...
A trade opens with both a Buy (B) and Sell (S) Order Price (OP) at an either automated or Manually set Time (T), The Periodicity (P) is set to say, 5 Minutes to check the current Currency Price (CP) every 5 Minutes. The Currency Price (CP) at 5 minutes is compared with the order price of both Buy and Sell orders. If the Currency Price (CP) is greater than the Order Price (OP) then the system continues with the Buy order and closes off the Sell order. If the Currency price is less than the Order Price (OP), then the system continues with the Sell and closes of the Buy Order (B).
Buy
Let’s Say the CP (at T+P) is greater than the OP, then the Sell will be closed off with a loss of (L = CP - OP), the Buy stays open because the Currency Price (CP) is greater than the Order Price (OP). This process has shown us in which direction the order is moving, upwards.
The System saves the New Price (NP), which is the Currency Price (CP) at Time (T). At time (T = T+2P), the system again compares the Currency Price (CP) with the New Price (NP) and if the CP is greater than NP, then CP becomes the new NP. At time (T = T+3P), the system will again compare the Currency Price (CP) with the New Price (NP) and again, if CP is greater the NP, then CP becomes the new NP. This process repeats itself until NP is greater than CP and at this Closing Price (ClP), the System closes the order to take whatever profit has been made and at the same time, opening a New Buy (B) and Sell (S) order at a new Order Price (OP) to begin the process again.
Sell
Let’s Say the CP (at T+P) is Less than the OP, then the Buy will be closed off with a loss of (L = OP - CP), the Sell stays open because the Currency Price (CP) is less than the Order Price (OP). This process has shown us in which direction the order is moving, downwards.
The System saves the New Price (NP), which is the Currency Price (CP) at Time (T). At time (T = T+2P), the system again compares the Currency Price (CP) with the New Price (NP) and if the CP is less than NP, then CP becomes the new NP. At time (T = T+3P), the system will again compare the Currency Price (CP) with the New Price (NP) and again, if CP is less the NP, then CP becomes the new NP. This process repeats itself until NP is less than CP and at this Closing Price (ClP), the System closes the order to take whatever profit has been made and at the same time, opening a New Buy (B) and Sell (S) order at a new Order Price (OP) to begin the process again.
This Entire Process is recurring and the logic applies to both the Sell and Buy orders. The actual profit of a trade would be the difference between the Order Price (OP) and Closing Price (ClP) minus the loss (L).
Please find attached an illustration to further clarify my explanation.