TRADING TRANSACTION EXAMPLE

Let’s consider real situation with currency pair EUR/USD (Euro to US dollar), as shown on the chart below.

With the Euro fall to USD lately, and analyzing market situation, analytical material and having conducted technical analysis, it is possible to suggest the start of correctional trend.

On January 06, about 16 hours, you take a decision to buy 100.000 Euros (the amount of one standard lot) for US dollars at the current rate 1.3410. In order to buy 1 lot Euro (100.000 Euro) for the price 1.3410 US dollars for 1 Euro, you need to have margin on your trade account in the amount of 1341 dollar ( 1000 Euro by rate 1.3410 at credit leveraging 1:100). As a result of this purchase transaction the growth in Euro rate will yield the amount of an exchange rate between current rate and the buying rate, multiplied by the  transaction amount (1 lot equals 100.000 Euro).

On January 7, about   14 hours, when EUR/USD rate of currency pair reaches the amount of   1.3720, you decide to close the position. So, you sell earlier purchased Euro for a higher price for US dollars. Therefore, the rate difference amounts to 0.0310 (1.3720-1.3410), and in fiscal equivalent meaning 3100 dollars (0.031x100000) net profit.

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