Trade example An example of trade in the Forex market: A trader can implement both buy and sell transactions. For example, upon analyzing a trader can decide that EUR rate is going to rise against USD (this decision can be stipulated by some released macroeconomic information concerning Europe or America, be it data on unemployment, GDP, inflation, etc.). To gain profit due to EUR rate rise against USD rate a trader buys EUR 10.000 for USD at the 1,2000 rate with the transaction expenses of 12.000 dollars. On the essential rise of the rate the trader sells EUR 10.000 at the 1,2100 rate and gains 12.100 dollars of profit. Thus, the trader’s net profit from the transaction carried out makes up the following: 12.100 – 12.000 = 100 dollars. Similarly, sell trading (scale trading) is carried out, when a trader expects the base exchange rate to decrease against the quoted one, but the first transaction will be selling at the existing rate and then buying at the lower one. In this case the trader as well has a favorable difference of the rate change, and a brokerage firm gives an opportunity to sell without having any currency. For example, a trader is interested in GBP/CHF rate decrease (pound of Great Britain against franc) and sells 10.000 pounds at the rate of 2,5000 (1 pound = 2,5 francs) gaining 25000 francs for this transaction. To gain profit of the transaction the trader buys the same 10.000 pounds at the lower 2,4500 rate with the transaction expenses of 24500 francs. The sell transaction will result in the following: 25000 (gained)-24500 (spent) = 500 francs (about USD 400). |