Example of a profitable operation FOREX

Learn from this example of a forex trading, where the author Omar Vargas calculates dollar benefits from trading on the currency pair USD / JPY treated by number of seeds that moved the currency pair:

To make a profit in Forex, a trader can enter the market as a * buy position * (known as going "long") or * sell position * (known as going "short").

For discussion, assume that you have studied the EURO.

Business methods, rules, strategies, etc.., I say that prices will rise for a while.
If you buy EUR / USD (or, technically, you will at the same time, the base currency of dollars, to buy and sell).

Open your trading station software useful (provided free online broker), which resides on the desktop and you see that EUR / USD is trading at:

<Eur / usd: = "" 1.3242/45 = "" >>

Remember the quote on the left of / (1.3242) is the bid price or "sell" (what you get when you sell EUR USD).
Quote of the right of / (1.3245) is used for the request or "buy" price (what you pay in U.S. dollars, if you buy EUR).

So, it is estimated that the market price for the EUR / USD will increase, you will enter a * buy position * in the market.
For simplicities love, say you bought a lot at 1.3245.
As long as you buy the pair at a higher price, then make money.

But do not worry.
This process is apparently treated is maintained and calculated for you, through the broker software above.
Graphic software and quote are in agreement with all parties currencies.

To illustrate a typical selling FX trade, consider this scenario involving the currency pair USD / JPY:

Remember ~ sale ("going short") the currency pair is to sell the base currency first and buy the second, indicating the currency.
Sell ​​the currency pair if you believe the base currency (USD) will go to the quote currency (JPY), or equivalently, that the quote currency (JPY) will continue to increase relative to the currency of
base (USD).

Note: while the calculations of profit, the scenario of trade short sale below, it may seem a little complicated if you've never been in the FOREX market before trust us when we say, this process is almost
transparent through your broker trade station (software).
We are only showing you that this thought process below to see how a profit also occurs when

Sell ​​a currency pair.

The current asking price bids for USD / JPY is 105.26/105.30, meaning that you can buy for U.S. $ 105.30 Japanese YEN or sell U.S. $ 105.26 YEN.

Suppose you decide that the U.S. Dollar (USD) is overvalued against the YEN (JPY).
To execute this strategy, sell Dollars (simultaneously buying YEN), and then expect to increase rates.

Make trade: 100,000 dollars buying and selling 10,526 000 yen.
(Remember, a margin of 1%, the deposit of initial margin is $ 1,000.)

As you expected, USD / JPY falls to 104.26/104.30, meaning that you can now buy $ 1 U.S. for $ 104.30 Japanese YEN or sell U.S. $ 1 104.26

Because you're short dollars (and are long YEN), you must buy dollars and sell back the YEN to make a profit.

You buy 100,000 USD at current rates of 104.30 USD / JPY and receive 10 430 000 yen.
Since you originally bought (paid) 10 526 000 yen profit is 96,000 yen.

To calculate your PL & in terms of dollars, simply divide 96,000 at the current rate of 104.30 USD / JPY.

Total profit = U.S. $ 920.42



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