Tuesday, October 13, 2009

Trading with margin

Now in case you are trading with margin of 100:1, the calculation of the trade will be giving you a total different picture:

Buying Japanese Yen when USD/JPY 109.2:

Long Japanese Yen = (100 x 1000 x 109.2) Yens = 10,920,000 Yens;
Short USD $100,000.Selling of Japanese Yen when USD/JPY 109.0:

Short Japanese Yen = 10,920,000; Long USD = (10,920,000 / 109) = $100,183.5.

Profit made in the trade: $183.5.
ROI of the trade: 183.5/1000 x 100% = 18.35%

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