Taking a long position when dealing with a pair of GBPUSD and taking a short trading position EURUSD …
Taking a long or short trading position on Forex Trading
Taking a long position when dealing with a pair of GBPUSD
Suppose it is the first day of the month and that the GBP is traded for approximately 1.2686 to 1.5688 USD. Traders are worried about the employment trend in the US. They assume that the NFP’s main employment indicator will show results worse than economists have estimated.
It could be assumed that in similar situations the US dollar will weaken and the British pound will strengthen against the dollar. That’s why you decide to buy, you take a long position and buy $ 10,000 for £ 1,500 at $ 1,2688.
The trade volume is expressed in units of the first currency or the so-called base currency in that pair. For this transaction, you chose a 50: 1 financial leverage, so an initial deposit of $ 313.76 – 10,000 x 1,2688 / 50 is required.
The situation develops to your liking, and the pound has strengthened against the US dollar. Once it has reached 1.5750, you have decided to make your profit. Our new price is 1.5750 / 1.5752 and you make a sale that you close at 1.5750.
Result: You bought at 1.5688 and sold at 1.2750. You have achieved an increase of 62 pips. By doing so, you have earned $ 62 – according to the formula (1.2750 – 1.2688) x 10.000 = 62.
Profit resp. the loss is calculated and expressed in units of the second currency of that pair.
Profit – Loss Calculation: The difference between the closing and opening prices multiplied by the volume of the trade.
Alternative scenario: If the NFP indicator showed better results than expected, the US dollar would strengthen against the pound.
So, if the ratio between pound and dollar dropped, say, to 1.2630, you would see a loss of $ 58 – according to the formula (1.2688 – 1.2630) x 10.000 = 58.
Taking a short trading position EURUSD
Suppose it is 12.12. and EURUSD deals are 1.1360 / 1.1361
Investors are concerned about the impact of the crisis due to deepening indebtedness, and expect the EUR to fall against the dollar. So you decide to sell and take a short position: You sell 10.000 EUR at 1.1360.
For this transaction, you chose a 20: 1 leverage, requiring an initial deposit of 668.00 USD – 10,000 x 1.1360 / 20.
The transaction was successful for you. You were right and the EUR lost some of its value to 1.3251 against the USD. So the store went out and you decide to make your profit. Our new price is 1.1250 / 1.1251 and you close at 1.1251.
You sold at a ratio of 1.3360 and bought at 1.1251, which represents a drop of 109 pips. For you, a profit of $ 109 – according to the formula (1.1360 – 1.1251) x10,000 = 109, was generated for you.
Alternative Scenario: If a weaker dollar abroad would have pushed the EUR overnight to 1.1490, you would suffer a loss of 130 USD (1.1490 – 1.1360) x 10.000 = 130.