Dollar Sizetransactions in ‘first currency’ in the pair ‘Contract sizes’ in ‘first currency’ in the pair Standard is the following: EURUSD: GBPUSD; USDJPY; USDCHF; AUDUSD; NZDUSD; USDCAD; GBPJPY; GBPCHF; EURGBP; EURJPY; EURCHF; CHFJPY Customer: Buy always @Ask, Sell always @Bid Calculations for ‘Direct’ currencies (GBP; EUR; AUD; NZD) P/L calc.: (Sell Price – Buy Price) x ‘lot size’ x # of lots Example1. GBPUSD ‘Lot’ in GBP. Ex.: GBP100,000 Customer Buy GBP @Ask, Sell @Bid Quote: 1.4410/20 Customer Buy GBP @20, Sell @10
Example 1.1: Quote 1.4410/20. Open buy cable at 20. 1 lot. Hoping to go ^. Quote 1.4430/40. Liquidation: Close sell cable at 30. Gain 10 pips. Profit: (1.4430 – 1.4420) x GBP100, 000 x 1 lot. 1.4430 > 1.4420, so we are in profit. Result is in dollars, as you see.
Calculations for ‘Indirect’ currencies (CHF; JPY; CAD) P/L calc.: (Sell Price – Buy Price) x ‘lot size’ x # of lots : Closing price* * Closing of this particular transaction = Liquidation price; NOT Close day rate Example 2 USDCHF ‘Lot’ in USD. Ex.: USD 100,000 Customer Buy USD @Ask, Sell @Bid Quote: 1.6510/20 Customer Buy USD @20, Sell @10
Example 2.1: Quote 1.6510/20. Open buy USD at 20. 1 lot. Hoping to go ^. Quote 1.6530/40. Liquidation: Close sell USD at 30. Gain 10 pips. Profit: (1.6530 – 1.6520) x USD100, 000 x 1 lot. 1.6530 > 1.6520, so we are in profit. BUT result is in CHF. Need to convert into USD. Using Liquidation rate for conversion. Profit: (1.6530 – 1.6520) x USD100, 000 x 1 lot : 1.6530 Result is in dollars.
Crosses: Similar to ‘Indirect’ currencies: Transactions in ‘first currency’ in the pair ‘Contract sizes’ in ‘first currency’ in the pair Results in ‘second currency’ in the pair Need to convert into USD.
If ‘Second currency’ is ‘ Direct currency’ Using ‘Second currency’/ USD BID rate at time of liquidation* for conversion.
If ‘Second currency’ is ‘ Indirect currency’ Using USD/ ‘Second currency’ BID rate at time of liquidation* for conversion. *Closing of this particular transaction = Liquidation price; NOT Close day rate
Calculations for Crosses: P/L calc.: If ‘Second currency’ is ‘ Direct currency’ [(Sell Price – Buy Price) x ‘lot size’ x # of lots] x ‘Second currency’/ USD BID rate at time of liquidation [(Sell Price – Buy Price) x ‘lot size’ x # of lots] : USD/ ‘Second currency’ BID rate at time of liquidation
Example 3 EUDGBP ‘Lot’ in EUR. Ex.: EUR 100,000 Customer Buy EUR @Ask, Sell @Bid Quote: 0.6110/20 Customer Buy EUR @20, Sell @10
Example 3.1: Quote 0.6110/20. Open buy EUR at 20. 1 lot. Hoping to go ^. Quote 0.6130/40. Liquidation: Close sell EUR at 30. Gain 10 pips. Profit: (0.6130 – 0.6120) x EUR100, 000 x 1 lot. 0.6130 > 0.6120, so we are in profit. BUT result is in GBP (Gbp is ‘Direct”). Need to convert into USD. Using Liquidation BID rate for conversion. At time of liquidation ( when EURGBP rate was 0.6130/40), GBPUSD rate is 1.4410/20 Bid rate 1.4410 Profit: (0.6130 – 0.6120) x EUR100, 000 x 1 lot x 1.4410 Result is in dollars.
Example 4 EUDCHF ‘Lot’ in EUR. Ex.: EUR 100,000 Customer Buy EUR @Ask, Sell @Bid Quote: 1.4610/20 Customer Buy EUR @20, Sell @10
Example 4.1: Quote 1.4610/20. Open buy EUR at 20. 1 lot. Hoping to go ^. Quote 1.4630/40. Liquidation: Close sell EUR at 30. Gain 10 pips. Profit: (1.4630 – 1.4620) x EUR100, 000 x 1 lot. 1.4630 > 1.4620, so we are in profit. BUT result is in CHF (CHF is ‘Inirect”). Need to convert into USD. Using Liquidation BID rate for conversion. At time of liquidation ( when EURCHF rate was 1.4630/40), USDCHF rate is 1.6510/20 Bid rate 1.6510 Profit: (1.4630 – 1.4620) x EUR100, 000 x 1 lot : 1.6510 Result is in dollars.
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