If we bought 20,000 CHF/USD, and CHF/USD went from 1.2400 to 1.2450…
According to my calculations, the profit is CHF 80.32. Is this correct?
My calculations:
CHF/USD went from 1.2400 to 1.2450.
How much USD did we make if we bought 20,000 Swiss Francs?
We made 0.0050 USD per swiss franc bought. As we bought 20k of them, we made 0.0050 x 20k = 100 USD.
At current exchange rate, this is equal to 100/1.2450 = 80.32 CHF.
Is this correct?
Sorry if this question is dumb as I am a complete Forex Beginner.
I not even bother to calculate that. Check it out with a demo of your brokers choice. Then you learn also something about rollover, spread, commissions etc. depending on how long you hold for a trade, lotsize, etc. etc.
The trade you have described is not a standard retail forex trade.
If you were trading the CHF against the USD [B]in the retail forex market,[/B] then the pair available to you would be the [B]USD/CHF[/B] (not the “CHF/USD”, as you referred to it). You would have the ability to go LONG or SHORT the USD/CHF, and [B]your position size would be stated in units of USD,[/B] not in units of CHF.
The trade you described, in which you earned a profit when the CHF gained in value against the USD — corresponds to a standard retail forex trade in which you earn a profit by SHORTING the USD/CHF.
Where are you placing this hypothetical trade?
If there is a venue where you can trade the “CHF/USD” pair, then within that venue, your math is correct, based on the prices given in your example.
Just to clear that up: I never thought something or somebody here in is hot or not hot. That’s your very own interpretation, Clint. I was neutral and just posted that funny emoticon, because that was an event I thought I could use it. I do not imagine any other event here in bp where I could imagine to use that emoticon. So, it was nothing against you or the other poster either.
Well in my two years here… thats a first! I love him too… best mind here! Dont think well be holding hands in the park anytime soon though… ahem… sharp chuck on the shoulder there Clint! LOL!!!
Thank you very much. At least somebody here answered my simple question.
This example was just mentioned in a video I saw teaching the basics of forex. It is purely hypothetical. I was confused about their calculations as they said the profit would be USD$80.32 - rather than CHF80.32.
