Monday, November 2, 2009

4.3.4 Forex Calculus : Calculating Profit and Loss - Scenario 4

USD Is the Base Currency (Loss)
This example is arithmetically identical to the previous example,
except that a small loss was incurred. We purchased 5,000
units of the USD/CAD pair at 1.3152 and set a stop-loss limit

order at 1.3142, which, unfortunately, was triggered .
Using the same adjusted profit formula as in the previous example,
Profit in USD = Price Change x Units Traded / Exit Price
we find:
-$3.80 =-0.0010 x 5000 / 1.3142
Note: Always keep your losses small.

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