Forex trading advantages
Forex trading examples Foreign exchange is a two-way transaction, which can be either long (buy up) or short (buy down). In simple terms, if you think the exchange rate will rise, buy it; if you think it will fall, sell it. If the direction is right, you can make a profit. You can refer to the following “Euro / USD” trading example to understand the relevant calculation principles.
Profit and loss calculation formula Total profit and loss = (selling price-buying price) x contract units x trading lots-overnight interest (if any)-spreads (GMS INTERNATIONAL MT5 platform 0 commission)
* Closed on the same day, no overnight interest is required to be paid, the actual overnight interest is subject to the platform display.
Sale example Buy EUR / USD (EURUSD) One lot of EURUSD contracts worth 100,000 Euros. Investors believe that the euro is priced low and will appreciate in the near future, so they take advantage of the EURUSD. When the EURUSD buy price is 1.2840, the investor buys 1 contract. When the euro selling price rises to 1.3040, the investor sells 1 contract at the price of 1.3040 to close the position, earning 200.0 points (1.3040- 1.2840). The total profit and loss is: (selling price-buying price) x contract units x trading lots ± overnight interest-commission = (1.30400-1.28400) * 100,000 * 1 ± 0-0 = 2000 USD. Sell EUR / USD (EURUSD) Investors believe that the euro is priced high and will depreciate in the near future, and therefore sell EURUSD while taking advantage of it. When the sell price of EURUSD was 1.3110, the investor sold 1 contract, but the euro price increased. When the purchase price was 1.3310, the investor bought 1 contract at the price of 1.3310 to close the position, losing 200.0 points. (1.3110-1.3310). The total profit and loss is: (selling price-buying price) x contract units x trading lots ± overnight interest-commission = (1.3110-1.3310) * 100,000 * 1 ± 0-0 = -2000 dollars.