Trade summary for Pound/Yen (short):
- Entry: 1.9803/0.9392 (see Pound/Yen)
- Exit: 1.9386/0.9328 (see Pound/Yen)
- P/L: (1.9803 - 1.9386) / 0.0001 * $6.25 - (0.9392 - 0.9328) / 100 / 0.000001 * $12.5 = $1806.25 / contract
- ROC: $1806.25 / ($2700 + $2700) * 100% = 33.45% / contract
Note:
- My Yen quotes were 100 times of the actuals.
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6 comments:
Boon,
Pardon me for being completely ignorant about forex. Question - how much does it cost, for example, to short 1 contract of Pound/Yen @ 1.9803/0.9392 ? And what about the commission?
Also, what is the difference between trading forex and forex futures?
Thanks.
There are 2 ways you could short the Pound against the Yen.
1. You can short the Pound/Yen crossrate directly. The margin requirement for this is $2,700 per contract per side.
http://www.cme.com/trading/prd/fx/british-japanese.html
2. Alternatively, you can short Pound/US Dollar and long Yen/US Dollar. I tend to do it this way, because there's more liquidity in individual markets. The margin requirement for this is $2700 + $2700 = $5,400 per contract per side.
http://www.cme.com/trading/prd/fx/british.html
http://www.cme.com/trading/prd/fx/japanese.html
Commission comes very cheap when you are talking about the futures markets. As far as my broker (TradeStation Securities) is concerned, you are talking about less than $5.00 per contract per side -- that's including exchange and overnight fees!
http://www.tradestation.com/fees/All_Asset_Types.shtm
Futures is leveraged.
hi boon,
normally, how much leverage are u using? from what i've read so far, leverage is like a double edged sword.Geared too high and you might be easily wiped out.
The futures markets themselves are leveraged -- meaning even if a market you participated moves only 1 or 2%, your capital gain/loss could be as much as 20 or 30% in some cases. Leverage is, of course, a double edged sword. That's why discipline is extremely important. 90% of day traders in the futures markets are losers. There aren't many who could win *consistently* in these markets. In fact, no-one can by simply following blogs or tuning in to radio channels or watching CNBC/Bloomberg.
Though I have managed to maintain a very good track record of consistent wins, you must *never* take my advice as a sure-win. Do your homework and develop your own way of thinking -- strive to think like Warren Buffett. That's one of the best advices I could give to all new starters.
very true indeed.... i had a bad experience on that previously on the klse stock market :(
u can't really follow the tips bcoz u dunno the full system. knowing position is not enuf. and u do not have discretion..
now i am starting to learn forex as the stock market is going bear :) a lot of things to learn
I won't say that all stock markets are in a bear market, though I am not a strong believer in the decoupling theory. I am still in the process of getting some homework done.
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