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Examples

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SELLING USD/JPY Contract

A USD/ JPY contract consists of 100,000 USD and well is quoted with spread of 5 points (and minimum quote fluctuation of 0.01) margin requirement is $ 1000 per contract.

A client believes that the US Dollar is overvalued and will weaken against the Japanese Yen. To exploit the situation the client intends to sell USDJPY.

USDJPY is quoted at 117.30/35. The client sells (5 ) lots at 117.30. This requires a total deposit of $5,000. The client requires a minimum deposit of $1,000 for each position.

The US Dollar does in turn weaken dramatically against the Japanese Yen and prices therefore fall to 116.25/30. The client reacts to the news by closing his position he therefore BUYS (5) lots of USDJPY at 116.30. The client has made exactly 100 points. (117.30-116.30).

If the client SOLD USD/ JPY at 117.30 and bought back at 116.30 then the 1.00 profit will be represented in US Dollars as ( 117.30 – 116.30 ) * 100,000 / 116.30 = $ 859.85 per contract . This results in a total profit of $ 4299.25 (859.85 * 5 contracts).

1. Sell 5 USDJPY @ 117.30 – Buy 5 USDJPY @ 116.30 +100 points profit
2. (117.30 – 116.30) * 100,000 * 1) / 116.30 +$859.85 per contract
3. $859.85 * 5 (No. of Contracts) +$4,299.25 gross profit
*Commission charges are NOT included in the above calculations.

Interest adjustments will only be enforced if the client holds positions into future trading days, rather than settling positions (with an equal and opposite position) intra day.

Buying STERLING DOLLAR Contract

A GBP/USD contract consists of 100,000 GBP and well is quoted with spread of 5 points (and minimum quote fluctuation of 0.0001) margin requirement is $ 1500 per contract.

A client believes that the Sterling is undervalued and is due to rise in the future against the US Dollar. To exploit the situation the client intends to buy GBPUSD.

GBPUSD is quoted at 1.8940/45. The client buys 5 lots at 1.8945. This requires a total deposit of $7,500. The client requires a minimum deposit of $1,500 for each position.

GBPUSD prices fall to 1.8900/05. The client reacts to the news by closing his losing position; he therefore sells 5 lots of GBPUSD at 1.8900. Therefore the client has lost 0.0045, or 45 points (1.8945 – 1.8900).

If the client BOUGHT at 1.8945 and SOLD back at 1.8900, then the 0.0045 loss will be represented in US Dollars as: (1.8900 – 1.8945) * 1 * 100,000 = – $450 per contract. This results in a total loss of $2,250 ($450 * 5 contracts).

1. Buy 5 lots GBPUSD @ 1.8945 – Sell 5 lots GBPUSD @ 1.8900 – 0.0045
2. (1.8945 – 1.8900) * 1 *100,000 = – $450 – $450 per contract
3. -$450 * 5 (No. of contracts) = -$2,250 $2,250 gross loss
*Commission charges are NOT included in the above calculations.

Interest adjustments will only be enforced if the client holds positions into future trading days, rather than settling positions (with an equal and opposite position) intra day.
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229 thoughts on “Examples”

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