The Buy long – Sell short operations in Forex

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When you close out a trade, take the price exchange rate when selling the base currency and subtract the price when buying the base currency, then multiply the difference by the forex buy and sell size. That will give you your profit or loss. The transaction size isEuros. The transaction size is 10, What is your profit or loss? You can also calculate your unrealized profits and losses on open positions. Just substitute the current bid or ask rate for the action you will take when closing out the position.

For example, if you boughtEuros at 1. Similarly, if forex buy and sell soldEuros at 1. Remember that you must also subtract any dealer commissions or other fees from your profits or add them to your losses to determine your true profits and losses.

Also, remember that the dealer makes money from the spread. If you immediately liquidate your position using the same spread, you will automatically lose money. In this situation, what will the speculator do? Sell US dollars and buy Swiss francs at 1.

Sell Swiss francs and buy US dollars at 1. That eliminates C and D as possible answers. When you sell dollars to a dealer, the dealer wants to buy the currency at the bid price. In this case, when you sell dollars to the dealer, you will receive only 1. No gain or loss D.

There is not enough information in the problem to answer the question. When the dealer quotes a spread, the dealer is seeking to buy at the low price and sell at the high price. If a speculator enters this spread, she will have bought the currency at The position is offset when the spread is 1. What will be the result? In this case, our speculator sold US dollars and received Canadian forex buy and sell. As a result, the speculator received 1.

The speculator receivedCanadian dollars 1. Subsequently, the value of the US dollar depreciated against the Canadian dollar. The speculator boughtUS dollars forex buy and sell sold Canadian dollars for 1. The speculator still had 4, Canadian dollars, which represents his profit.

However, before you can answer the question, you must convert Canadian dollars into US dollars. To solve this problem, you need to forex buy and sell out how many US dollars it takes to buy 4, Canadian dollars.

When the speculator reversed the long Canadian dollar position, it took him 1. How do I calculate profits and losses? This page is part of archived content and may be outdated. When you think you know the answer, advance to the next screen.

The correct answer is B. The correct answer is C.

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To help you understand how forex trading works, view our CFD examples below, which take you through both buying and selling scenarios. Your prediction was correct and the price rises over the next hour to 0. You decide to close your long trade by selling at 0. The price has moved 57 points 0. You feel the price is likely to continue dropping, so to limit your losses you decide to sell at 0. Practise trading risk-free with virtual funds on our Next Generation platform.

Open a demo account. You decide to close your short trade by buying at 1. The price has moved 49 points 1. You feel the price is likely to continue rising, so to limit your losses you decide to buy at 1. If you hold your position past 5pm New York time 10pm UK time , your account will be debited or credited at the prevailing holding rate.

If you have bought a higher yielding currency you may receive interest; if you have bought a lower yielding currency you may be charged interest. For more details on our FX overnight holding rates, please refer to the 'Product Overview' section for the relevant pair.

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Learn forex trading Forex trading examples Forex technical indicators Using leverage in forex trading Benefits of forex trading What is forex? How do I fund my account? How do I place a trade? Do you offer a demo account? How can I switch accounts? Create an account Trade over 9. Open a demo CFD account. Home Learn Learn forex trading Forex trading examples. CFD trading example 1: Test drive our trading platform with a practice account. Fill in our short form and start trading Explore our intuitive trading platform Trade the markets risk-free.

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CFD trading can result in losses that exceed your deposits. Ensure you understand the risks.