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hulk2008's Blogs

2010-07-15

As examples of trafficking in foreign currencies


Example 1
An investor has a margin deposit with Saxo Bank worth 10000 U.S. dollars

The investor expects the U.S. dollar to rise against the Swiss franc and therefore decides to buy USD 2000000 - 2% of his maximum possible exposure at a 1% margin trading in foreign currencies.

Saxo Bank to provide a valuable rate 20-1.5515 The investor buys USD at 1.5520.

Day 1: 2000000 is buying U.S. dollars against Swiss francs = 1.5520 Swiss franc sale in the amount of 3.104 million

Four days later, the dollar rose to 1.5745 Swiss francs, and the investor decides to take his profit.

Upon request, the Saxo Bank offer price for the investor 50-1.5745 of this, the investor sells at 1.5745.

Day 5: 2000000 sell U.S. dollars against 1.5745 Swiss francs = buy 3.149 million Swiss francs.

As the dollar side of the transaction involves a credit and a debit of USD 2000000 USD account will show an investor no change. And the account of the Swiss franc is showing a debit of CHF 3104000 and 3149000 a credit of CHF because of the simplicity of this example and the short time we have disregarded the transaction on the exchange rates that would marginally alter the profit calculation.

This results in a profit of 45000 Swiss francs, or about 28600 U.S. dollars, = 28.6% profit on the deposit of 100000 dollars.

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Example 2:
The investor follows the cross rate between the euro and the Japanese yen where it is believed that the market will be exposed to fall. Since it is not quite confident of this treatment is used less of the leverage available on his deposit. He chooses to ask the dealer for a price in million euros. This requires a margin of 1000000 x 5% = 10000 euro = about 52 500 U.S. dollars (EUR / USD is 1.05).

The dealer offer price of 10-112.05 The investor sells EUR at 112.05.

Day 1: 1000000 sell euros against the Japanese yen = 112.05 buy 112.05 million yen

He protects his position stop-loss orders to buy back the EUR at 112.60. Two days later, the arrest, where the euro has become stronger position short term in spite of the investor's expectations.

Day 3: the purchase of 1000000 euros to 112.60 Japanese yen = sell 112.6 million Japanese Yen

With the euro as of the transaction involves a credit and a debit of USD EUR 1000000 EUR account will show no change. And the account of the Japanese yen is what shows the amount owed 112.05 million yen and a credit of 112.06 yen, because of the simplicity of this example and the short time we have disregarded the transaction on the exchange rates that would marginally alter the profit calculation.

The result is a loss of 0.55 million yen = approximately 5300 U.S. dollars (USD JPY 105) = 5.3% loss on the original deposit of 100000 U.S. dollars.

Example 3:
The investor believes the Canadian dollar would be stronger against the U.S. dollar, a view long-term and so he takes a small position to allow a broader exchanges in the price:

Requests Saxo Bank rate 1000000 U.S. dollars versus the Canadian dollar and the dealer to provide price 95-1.5390 The investor sells at 1.5390 and the sale of U.S. dollar return, the equivalent of buying the Canadian dollar.



Day 1:
1000000 sell U.S. dollars against 1.5390 Canadian dollars, and the position out for two months in the future price of a presentation of 1.5357 Canadian dollars buys = 1.5357 million Canadian dollars for 61 days because of the interest rate differential.

Month after the movement might be required have been made, the investor will buy back the U.S. dollar at 1.4880 and the position forward for a month to match the original sale and the forward rate agreed was 1.4865.

Today No. 31:
1000000 buy the U.S. dollar against Canadian dollar = 1.4865 sell 1.4865 million Canadian dollars for 61 days.

Day No. 61:
Be met, and the intervention had stabilized the operations of books and not ensure a profit on the duration of 31 days and can be used for margin purposes before Day 61.

The account receives a U.S. dollar amount of the debtor and a creditor of 1000000 U.S. dollars and shows no change on the account. The CAD account is the amount of Canadian dollars 1535700 and 1486500 withdraw the amount of Canadian dollars where the profit is 49200 Canadian dollars, or about 33100 U.S. dollars = profit of 33.1% on the original deposit of 100000 dollars.

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