Some newb questions on trading the forex

Discussion in 'Forex' started by djxput, Oct 3, 2005.

  1. djxput


    So I buy 25,000 usd worth of USD/JPY ie margin amount used was 1100~ (not exact rough estimate).

    bought at 114.18 sold at 114.29

    now I use IB; I did this trade ie bought 25k then sold 25k am I doing this right? maybe this isnt much I dont know but it doesnt look like my acct went up at all. How much should I of made with this trade? how can you figure this out?

    also when I look at cash balance under my acct; it shows I still have some JPY. I also have - CHF from a trade I did last week.

    I dont understand exactly; how do I get rid of the JPY and get a even balance on the CHF.

    thanks for helping the newb
  2. At least one of the numbers sound like it may be incorrect. Most brokers will give you 100:1 or 200:1 on the account meaning that for a trade with the notional value of $25,000 you will have to put up either $250 or $75 in margin for the trade. Do you know what kind of margin you have on the account?

    But even so we can still calculate P/L for the trade, here is how we would do it. Since you are buying $25,000 worth of Yen we want to know how much that is, this is easy, (25,000 dollar X 114.18 yen per USD) so we now own 2,854,500 yen. So the Yen goes from 114.18 to 114.29, so now how much is our $25,000 worth in Yen, again its an easy calculation (25,000x 114.29 = 2,857,250 Yen).

    How much did we make off that 11 pip move? In yen terms we are up 2,750 because we started off with 2,854,500 yen and now we own 2,857,200 and 2,857,200-2854,500= 2,750. So how much is 2,750 yen in USD? Since we know that the price of Yen is 114.29 per USD the calculation again is an easy one (2,750/114.29) = $24.06. So we made $24.06 on that trade. I’m not sure if you were using the bid or ask prices for the trade but you can figure the transaction cost is about 4 pips ($8.70 on this trade give or take, we can do the calcs if you want).

    If you went long and closed out the transaction you should have no Yen still open. And the CHF is from a different trade completely. To close them out just open a position in the opposite direction of the current trade, so if you are long yen, go short the same amount to close. Make sense?

  3. I calculate your leverage at 25:1
  4. djxput


    hmmm supposedly the leverage at IB is 50:1
    In my acct it shows I have 2,150 yen

    I was using the .18 what I bought ie was at the ask and the .29 was when I sold it ie the bid.

    looks like theres a 2.50$ commission I would assume 5$ for the roundtrip then.

    so looks like I made 24$ off the trade but then - 5$ in comission

    well the 2150/114.29 = 18.8 hmmm seems about right.

    Also it looks like I have to pay commission to convert my currency ... so If I have a - balance on CHF do I need to convert some USD to CHF? and then convert my JPY to USD to see the profit?

    alot of stuff involved here.

    or am I totally off here?