The popular Forex market of EUR/USD has been decreasing and is at its lowest value for a month. Is it worth backing the market to return? 

At the moment the EUR / USD (Sept) market has a quote of 1.3631 - 1.3639. 

As with many markets, you can trade on the value of Foreign Exchange (aka Forex or FX) eg spread trading on the EUR / USD(Sept) value going up in price to more than 1.3639 by 14-Sep-07 (when this Sept market closes). 

With EUR/USD Forex, you trade in £X per point, where a point is 0.0001 of EUR/USD movement. eg if your stake was £10 per point and the EUR/USD moves 0.0004 then that would be an £40 difference to your profit and loss. 

So if you see a quote of 1.3631 - 1.3639 and you have done your market research and think that the EUR / USD market will go up to more than 1.3639 you could buy the market for lets say, a stake of £5 per point. 

And so let’s say that by the closing date ie, 14-Sep-07 the EUR / USD price settles at 1.3654. If so, you’ve made a profit on your FX trade. 

Your profits are calculated by taking the difference between the level the trade closed at, ie 1.3654 and the price you bought at, ie 1.3639 and then multiply that by the stake per point of movement. 

Profit = ((1.3654 - 1.3639) / 0.0001) x £5 per point stake. 

= (0.0015 / 0.0001) x £5 per point stake. 

= £75 profit. 

Of course if the trade didn’t work as expected and had the EUR / USD the market closed at 1.3620, then you would have made a loss rather than a profit. 

Loss = ((1.3620 - 1.3639) / 0.0001) x £5 per point stake. 

= (-0.0019 / 0.0001) x £5 per point stake. 

= -£95 loss. 

Good Luck! 

DB 

How to spread bet on Forex / Foreign Exchange 

www.CleanFinancial.com

 

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