Forex Trading: Calculating Profit And Loss In Foreign Currency Trading
出典: くみこみックス
The foreign exchange marketplace, or Forex industry, is an about-the-clock money industry exactly where the currencies of nations are bought and sold. Forex trading is usually done in currency pairs. For example, you purchase Euros, paying with U.S. Dollars, or you sell Canadian Dollars for Japanese Yen. The value of your Forex investment increases or decreases since of changes in the currency exchange rate or Forex rate. These alterations can happen at any time, and typically result from economic and political events. Making use of a hypothetical Forex investment, this report shows you how to calculate profit and loss in Forex trading.
To recognize how the exchange rate can have an effect on the value of your Forex investment, you need to understand how to read a Forex quote. Forex quotes are usually expressed in pairs. In the following example, your pair of currencies are the U.S. Dollar (USD) and the Canadian Dollar (CAD). The Forex quote, USD/CAD = 170.50, indicates that one particular privacy U.S. Dollar is equal to 170.50 Canadian Dollars. The currency to the left of the "/" (USD in this instance) is referred to as base currency and its value is usually 1. The currency to the proper of the "/" (CAD in this example) is referred to as the counter currency. In this example, 1 USD can purchase 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 market, and it is usually treated as the base currency in any Forex quote where it is one particular 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 www the Euro. The Forex rate of EUR/USD on August 26, 2003 was 1.0857, which implies that 1 U.S. Dollar was equal to 1.0857 Euros, and was the weaker of the two currencies. If you had purchased 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 more than what you had began with a single year earlier.
Conversely, if the Forex rate one particular 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 my forex megadroid $28.ten less than what you had began out with one particular year earlier.
As with stocks and mutual funds, there is threat in Forex trading. The risk results from fluctuations in the currency exchange industry. Investments with a low level of risk (for instance, lengthy-term government bonds) frequently have a low return. Investments with a increased level of threat (for example, Forex trading) can have a higher return. To accomplish your short-term and lengthy-term economic targets, you need to balance security and threat to the comfort level that functions best for you.
