Someone, please PLEASE help me understand how this money conversion/trading block works. Pretend we are trading EUR/USD and the current rate is 1.5000. Also understand that my personal bank account is in USD.
I can “long” the EUR, and “short” the USD. If I bet a block of 10000 against this position, would I be risking 15000 USD (10000 * 1.5), or 6666.66 USD (10000 / 1.5)?
What if i “short” the EUR and “long” the USD for the same block size?
My brain is melting!!
Hi Steve
I am hoping that you are using a demo account. Without trying to be presumptious, are you new to trading ?
best regards
Regardless of whether you are long or short, the position size is in the base currency. That’s the first one. In your example it’s 10,000 Euros. It will be 10,000 EUR no matter if you’re long or short, and the value of the position will be $15,000 (10,000 x 1.50).
By the way, you’re not risking that much. That’s just the size of your position.