Currency exchange occurs whenever an individual visits a foreign country and exchange one country¡¯s currency for another. A speculator trader can then profit from buying or selling currencies when a market is increasing or decreasing in value. A sample trade and profit are illustrated in the following chart.
News: U.S. reported disappointing 2Q06 GDP figure at 8:30am, July 28, 2006.
Trading Strategy:
Open (Buy) 1 lot of GBP/USD ($1,000 margin, 100 times leverage) at 1.8545; Settle (Sell) at 1.8660
Profit = (1.8660 ¨C 1.8545) x $100,000 x 1 lot = $1,150 in less than 2 hours, a more than 100% gain with $1,000 of margin. |
Hypothetical performance results have many inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to the example shown. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight.In addition, hypothetical trading does not involve financial risk, and no hypothetical trade can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. |
