SELLING USD/JPY Contract

A USDJPY contract consists of 100,000 USD and is quoted with a spread of 3 points (and minimum quote fluctuation of 0.01). Margin requirement is $ 1000 per contract.

A client believes that the US Dollar is overvalued and will weaken against the Japanese Yen. To exploit the situation the client intends to sell USDJPY. USDJPY is quoted at 105.30/33. The client SELLS 5 lots at 105.30. This requires a total deposit of $5,000. The client requires a minimum deposit of $1,000 for each position.

The US Dollar does in turn weaken against the Japanese Yen and the price falls to 104.27/30. The client reacts to the news by closing his position. He BUYS 5 lots of USDJPY at 104.30. The client has made 1.00, or exactly 100 points (105.30-104.30) on each lot.

If the client SOLD USDJPY at 105.30 and bought back at 104.30 then the 1.00 profit will be represented in US Dollars as (105.30 - 104.30) x 100,000 / 104.30 = $ 958.77 per contract. This results in a total profit of $ 4748.35 (949.67 x 5 contracts).

Interest adjustments will only be enforced if the client holds positions into future trading days, rather than settling positions (with an equal and opposite position) intraday.

FOREX

Buying STERLING DOLLAR Contract

A GBPUSD contract consists of 100,000 GBP and is quoted with a spread of 3 points (and minimum quote fluctuation of 0.0001). Margin requirement is $ 1500 per contract.

A client believes that the Sterling is undervalued and is due to rise against the US Dollar. To exploit the situation the client intends to buy GBPUSD. GBPUSD is quoted at 1.5042/45. The client BUYS 3 lots at 1.5045. This requires a total deposit of $4,500. The client requires a minimum deposit of $1,500 for each position.

GBPUSD prices fall to 1.5000/03. The client reacts to the news by closing his losing position. He SELLS 3 lots of GBPUSD at 1.5000. The client has lost 0.0045, or 45 pips (1.5045 - 1.5000) on each lot.

If the client BOUGHT at 1.5045 and SOLD back at 1.5000, then the 0.0045 loss will be represented in US Dollars as: (1.5000 - 1.5045) x 100,000 = - $450 per contract. This results in a total loss of $1,350 ($450 x 3 contracts).

Interest adjustments will only be enforced if the client holds positions into future trading days, rather than settling positions (with an equal and opposite position) intraday.