Example of Forex Trading
An example of real trading: take GBP/USD as an example, the conversion rate is expected to appreciate or depreciate within the range from 1.5163 to 1.5203.
|GBP/USD is expected to appreciate (long/buy)||GBP/USD is expected to depreciate (short/sell)|
|(Buy) 1 standard unit (100K) GBP/USD||(Sell) 1/10 standard unit (10K) GBP/USD|
|100,000 basic currency per (100K) and the volatility value is USD 10||10,000 basic currency per (10K) and the volatility value is USD 1|
|If the conversion rate of GBP/USD starts from 1.5163 and takes long, it shall appreciate to 1.5203||If the conversion rate of GBP/USD starts from 1.5203 and sell/short, it shall depreciate to 1.5163|
|Point: 1.5203-1.5163 = 0.0040. It’s equal to 40 basic points||Point: 1.5203-1.5163 = 0.0040. It’s equal to 40 basic points|
|Profit: 40 x 10 = USD 400 (about RMB 2,500)||Profit: 40 x 1 = USD 40 (about RMB 250)|