Trading Example


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About Trading example

Forex trading is the world's largest financial market, with an average daily trading volume of $5.3 trillion. Forex trading buys one currency and sells another, so it always trades in pairs. Forex quotes are also constantly floating based on market demand and supply.

First you need to know

To calculate the profit and loss of a foreign exchange order, we must first understand how to calculate the foreign exchange point value pip: all foreign currency pairs can be divided into three categories: forward quoted currency pairs (such as EUR/USD, GBP/USD, etc.), reverse quoted currency pairs (such as USD/JPY, USD/CHF, etc.) and cross-currency pairs (such as GBP/CHF, EUR/JPY, etc.)

1. Currency pair of forward quotation: [pip]= [lot size] * tick size] ""Lot size is the number of contracts per hand; tick size is the number of jumping points, such as EUR/USD, which is 0.00001. For the currency with forward quotation, the value of each point is constant, independent of the current quotation Example: For EUR / USD, lot size is 100,000 and tick size is 0.00001. Point value [pip] = 100000 * 0.00001 = $1""

2. Currency pair of reverse quotation: [pip]= [lot size] * [tick size]/ [current quote] ""For currencies with reverse quotations, the value of each point depends on the current quotation. Example: For USD / JPY, lot size is $100,000 and tick size is 0.001. The quotation is 109.380, [pip] = 100000 * 0.001 / 109.38 $0.914"

3. Point values of cross-currency pairs: [pip]= [lot size] * [tick size] * [base quote]/ [current quote] ""Among them, base quote is the current quotation of the quoted currency against the US dollar. Example: For GBP/CHF, lot size is 100000, tick size is 0.00001, base quote is GBP/USD is 1.26646, current quote is 1.25731, point value is 100000 * 0.00001 * 1.26646 / 1.25731≈1$"

Knowing the point value of the currency pair, let's now calculate the profit and loss of a foreign exchange order. Foreign Exchange Profit and Loss = Point of Profit and Loss * Point Value * Trading Volume (Positive Fluctuation with Order Direction, Final Positive Value, Otherwise Negative Value) Take USDJPY as an example. We sold 5 empty orders when USDJPY quoted 109.380 and closed the position when the price reached 108.580 (1 basis point value was US$0.914). Profit and loss=[(109.380-108.580) that is 800 basic points] *0.914*5 = 3656 US dollars;"

Metals

Taking XAUUSD as an example, the minimum number of jumping points is 0.01, and the point value of one base point is $1 (under six quotations) We bought five sizes orders when XAUUSD quoted $1220.15 per ounce and closed our position at $1231.25 per ounce.
Open price close price points value size profit
1220.15 1231.25 1100 1USD 5 5500USD
"Profit and loss amount =[1231.25-1220.15 ( 1110 basis points)] *1 U.S. dollars (point value)*5 standard sizes = 1110 U.S. dollars"

Commodities

"Taking WTI as an example, the minimum number of jumping points is 0.001, and the point value of one base point is $1 (under five quotations). We bought five sizes orders when WTI quoted 52.363 and closed our position at 53.763"
Open price close price points value size profit
52.363 53.763 1400 1USD 5 7000USD
"Profit and loss amount =[53.763-52.363. ( 1400 basis points)] *1 U.S. dollars (point value)*5 standard sizes =7000 U.S. dollars"

Indices

"Taking DJ30 as an example, the minimum number of jumping points is 0.1, and the point value of one base point is $1 (under five quotations). We bought two sizes orders when DJ30 quoted 25032.8 and closed our position at 25432.8" Profit and loss amount =[25832.8-25032.8. (4000 basis points)] *1 $ (point value)*2standard sizes =$8000
Open price close price points value size profit
25032.8 525432.8 4000 1 2 8000
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