To make a profit in the FOREX, a trader can enter the market as a buy position * (known as going "long") or * a * sell position (known as going "short").
For discussion, let's assume you have been studying the EURO.
Your trading methods, rules, strategies, etc, they say that prices will rise for a time. So buy the EUR / USD (or, technically, at the same time going to buy euros, the base currency and sell dollars).
You open your trading station software by hand (provided to you free by the online broker), located on the desktop, and you see the EUR / USD is trading at:
REMEMBER: the quote to the left of the / (1.3242) refers to the offer or "sell" price (what you get in dollars by selling euros). The quote on the right of / (1. 3245) is used to "buy" the question or the price (you have to pay in dollars if you buy euros).
Therefore, they believe that the market price for the EUR / USD will go higher, you enter a buy position * in the market. For simplicity's sake, say you bought a lot at 1.3245. While the couple sell again at a higher price, then making money.
But do not worry. This process apparently produced is handled, and even calculates that, through the agent software mentioned above. The graph and table software appointment agree with all parts of the coins.
To illustrate a typical FX trade sell, consider this scenario in the USD / JPY currency pair:
REMEMBER ~ sale ("go short") the currency pair implies selling the first base currency and buying the second currency, budget. You sell the currency pair, if you believe the base currency (USD) will fall in relation to the quote currency (JPY), or equivalently, that the quote currency (JPY) will go up over the base currency ( USD).
NOTE: While the calculation of benefits in the trade scenario in the short sell below may seem complicated if you've never been in the forex market before, trust us when we say "this process is virtually transparent through your broker trade station (software). We are showing the process of thinking ahead so you can see how a PROFIT occurs even when
SELLING a currency pair.
The current bid / sale price of USD / JPY is 105.26/105.30, meaning you can buy $ 1 U.S. from 105.30 Japanese yen, or sell U.S. $ 1 from 105.26 yen.
Suppose you decide that the U.S. dollar(USD) is overvalued against the yen (JPY). To execute this strategy, sold dollars (while buying yen), and then wait for the exchange rate rise.
For what they do trade: selling U.S. $ 100,000 and the purchase of 10,526,000 yen. (Remember that 1% margin, your initial margin deposit would be $ 1,000.)
As expected, USD / JPY falls to 104.26/104.30, meaning you can now buy $ 1 U.S. $ 104. Japanese 30 yen or sell $ 1 U.S. from 104.26
Since you are fewer dollars (and much YEN), you must now buy dollars and sell back the yen to no benefit.
You buy U.S. $ 100,000 in the current USD / JPY 104.30 fee, and receive 10,430,000 YEN. As originally bought (paid for) 10,526,000 yen, its profit is from 96,000 yen.
To calculate your P & L in terms of U.S. dollars, simply divide 96. 000 by the current USD / JPY rate of 104.30.
Total profit = U.S. $ 920.42
For discussion, let's assume you have been studying the EURO.
Your trading methods, rules, strategies, etc, they say that prices will rise for a time. So buy the EUR / USD (or, technically, at the same time going to buy euros, the base currency and sell dollars).
You open your trading station software by hand (provided to you free by the online broker), located on the desktop, and you see the EUR / USD is trading at:
REMEMBER: the quote to the left of the / (1.3242) refers to the offer or "sell" price (what you get in dollars by selling euros). The quote on the right of / (1. 3245) is used to "buy" the question or the price (you have to pay in dollars if you buy euros).
Therefore, they believe that the market price for the EUR / USD will go higher, you enter a buy position * in the market. For simplicity's sake, say you bought a lot at 1.3245. While the couple sell again at a higher price, then making money.
But do not worry. This process apparently produced is handled, and even calculates that, through the agent software mentioned above. The graph and table software appointment agree with all parts of the coins.
To illustrate a typical FX trade sell, consider this scenario in the USD / JPY currency pair:
REMEMBER ~ sale ("go short") the currency pair implies selling the first base currency and buying the second currency, budget. You sell the currency pair, if you believe the base currency (USD) will fall in relation to the quote currency (JPY), or equivalently, that the quote currency (JPY) will go up over the base currency ( USD).
NOTE: While the calculation of benefits in the trade scenario in the short sell below may seem complicated if you've never been in the forex market before, trust us when we say "this process is virtually transparent through your broker trade station (software). We are showing the process of thinking ahead so you can see how a PROFIT occurs even when
SELLING a currency pair.
The current bid / sale price of USD / JPY is 105.26/105.30, meaning you can buy $ 1 U.S. from 105.30 Japanese yen, or sell U.S. $ 1 from 105.26 yen.
Suppose you decide that the U.S. dollar(USD) is overvalued against the yen (JPY). To execute this strategy, sold dollars (while buying yen), and then wait for the exchange rate rise.
For what they do trade: selling U.S. $ 100,000 and the purchase of 10,526,000 yen. (Remember that 1% margin, your initial margin deposit would be $ 1,000.)
As expected, USD / JPY falls to 104.26/104.30, meaning you can now buy $ 1 U.S. $ 104. Japanese 30 yen or sell $ 1 U.S. from 104.26
Since you are fewer dollars (and much YEN), you must now buy dollars and sell back the yen to no benefit.
You buy U.S. $ 100,000 in the current USD / JPY 104.30 fee, and receive 10,430,000 YEN. As originally bought (paid for) 10,526,000 yen, its profit is from 96,000 yen.
To calculate your P & L in terms of U.S. dollars, simply divide 96. 000 by the current USD / JPY rate of 104.30.
Total profit = U.S. $ 920.42
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