Forex Trading: Calculating Profit And Loss In Foreign Currency Trading — различия между версиями
(Новая: The foreign exchange marketplace, or Forex market, is an about-the-clock cash market where the currencies of nations are bought and sold. Forex trading is always completed in currency pa...) |
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| − | The foreign exchange | + | The foreign exchange market, or Forex market place, is an about-the-clock money market place exactly where the currencies of [http://www.best-forexrobot.org/forex-megadroid/ your megadroid] nations are bought and sold. Forex trading is often accomplished in currency pairs. For example, you get Euros, paying with U.S. Dollars, or you sell Canadian Dollars for Japanese Yen. The value of your Forex investment increases or decreases because of modifications in the currency exchange rate or Forex rate. These alterations can happen at any time, and usually result from financial and political events. Utilizing a hypothetical Forex investment, this article shows you how to calculate profit and loss in Forex trading.<br><br>To realize how the exchange rate can have an effect on the value of your Forex investment, you require to discover how to read a Forex quote. Forex quotes are usually expressed in pairs. In the following instance, your pair of currencies are the U.S. Dollar (USD) and the Canadian Dollar (CAD). The Forex quote, USD/CAD = 170.50, signifies that 1 U.S. Dollar is equal to 170.50 Canadian Dollars. The currency to the left of the "/" (USD in this example) is referred to as base currency and its value is always 1. The currency to the appropriate of the "/" (CAD in this example) is referred to as the counter currency. In this example, 1 USD can acquire 170.50 CAD, simply because it is the stronger of the two currencies. The U.S. Dollar is regarded as the central currency of the Forex industry, and it is always treated as the base currency in any Forex quote where it is a single of the pairs.<br><br>Let's go now to our hypothetical Forex investment to show how you can profit or come up short in Forex trading. In this instance, your pair of currencies are the U.S. Dollar and the Euro. The Forex rate of EUR/USD on August 26, 2003 was 1.0857, which indicates that 1 U.S. Dollar was equal to 1.0857 Euros, and was the weaker of the two currencies. If you had bought 1,000 Euros on that date, you would have paid $1,085.70.<br><br>A single year later, the Forex rate of EUR/USD was 1.2083, which signifies that the value of the Euro increased in relation to the USD. If you had sold the 1,000 Euros one year later, you would have received $1,208.30, which is $122.60 much more than what you had started with one year earlier.<br><br>Conversely, if the Forex rate 1 year later had been EUR/USD = 1.0576, the value of the Euro would have weakened in relation to the U.S. Dollar. If you had sold the 1,000 Euros at this Forex rate, you would have received $1,057.60, which is $28.10 less than what you had started out with one year earlier.<br><br>As with stocks and mutual funds, there is threat in Forex trading. The danger results from fluctuations in the currency exchange market place. Investments with a low level of danger (for example, lengthy-term [http://www.best-forexrobot.org/fap-turbo/ forex robots] government bonds) typically have a low return. Investments with a greater level of [http://www.best-forexrobot.org/ purchase forex robots] danger (for example, Forex trading) can have a larger return. To accomplish your short-term and long-term economic goals, you require to balance security and threat to the comfort level that operates best for you. |
Текущая версия на 04:40, 29 июня 2012
The foreign exchange market, or Forex market place, is an about-the-clock money market place exactly where the currencies of your megadroid nations are bought and sold. Forex trading is often accomplished in currency pairs. For example, you get Euros, paying with U.S. Dollars, or you sell Canadian Dollars for Japanese Yen. The value of your Forex investment increases or decreases because of modifications in the currency exchange rate or Forex rate. These alterations can happen at any time, and usually result from financial and political events. Utilizing a hypothetical Forex investment, this article shows you how to calculate profit and loss in Forex trading.
To realize how the exchange rate can have an effect on the value of your Forex investment, you require to discover how to read a Forex quote. Forex quotes are usually expressed in pairs. In the following instance, your pair of currencies are the U.S. Dollar (USD) and the Canadian Dollar (CAD). The Forex quote, USD/CAD = 170.50, signifies that 1 U.S. Dollar is equal to 170.50 Canadian Dollars. The currency to the left of the "/" (USD in this example) is referred to as base currency and its value is always 1. The currency to the appropriate of the "/" (CAD in this example) is referred to as the counter currency. In this example, 1 USD can acquire 170.50 CAD, simply because it is the stronger of the two currencies. The U.S. Dollar is regarded as the central currency of the Forex industry, and it is always treated as the base currency in any Forex quote where it is a single of the pairs.
Let's go now to our hypothetical Forex investment to show how you can profit or come up short in Forex trading. In this instance, your pair of currencies are the U.S. Dollar and the Euro. The Forex rate of EUR/USD on August 26, 2003 was 1.0857, which indicates that 1 U.S. Dollar was equal to 1.0857 Euros, and was the weaker of the two currencies. If you had bought 1,000 Euros on that date, you would have paid $1,085.70.
A single year later, the Forex rate of EUR/USD was 1.2083, which signifies that the value of the Euro increased in relation to the USD. If you had sold the 1,000 Euros one year later, you would have received $1,208.30, which is $122.60 much more than what you had started with one year earlier.
Conversely, if the Forex rate 1 year later had been EUR/USD = 1.0576, the value of the Euro would have weakened in relation to the U.S. Dollar. If you had sold the 1,000 Euros at this Forex rate, you would have received $1,057.60, which is $28.10 less than what you had started out with one year earlier.
As with stocks and mutual funds, there is threat in Forex trading. The danger results from fluctuations in the currency exchange market place. Investments with a low level of danger (for example, lengthy-term forex robots government bonds) typically have a low return. Investments with a greater level of purchase forex robots danger (for example, Forex trading) can have a larger return. To accomplish your short-term and long-term economic goals, you require to balance security and threat to the comfort level that operates best for you.
