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Example of getting a profit


 Getting a profit is an increase of capital initially invested in a transaction. By making a transaction a trader relies on increase in value of currency currently purchased by him in a certain period of time or he expects a decline in value of currency selling it. If a currency rate movement is correctly calculated a trader gets a profit from making transaction.

Making a transaction consists of three stages:
 • Determination of the most appropriate moment to make a transaction;
 • Making a transaction;
 • Closing a transaction and getting a profit.

Price for the chosen instrument is constantly changed. Price chart displays a change of trading instrument rate with time.

1st example

Express bull option

Let’s take an intraday EUR/USD chart for 21 June 2010 as example:

 A trader has 50 USD. He expects increase of EUR/USD rate at the 1 point in the next 30 minutes. The trader buys an “Express bull” option priced at 50 USD. In 30 minutes EUR/USD rate arrives at the 2 point. The currency rate at the 2 point is higher than at the 1 point. Trading conditions are met therefore a trader gets a profit.
 In this example the profit from transaction is equal to = 50 * margin of profit. Margin of profit is 1.85 for this type of option. It follows that a total profit from the transaction is = 50 * 1,85 = 92,5 USD.
 Let’s sum up. The trader purchased the option priced at 50 USD. The option made a profit in the amount of 92,5 USD. Net profit from the transaction is = 92,5 - 50 = 42,5 USD. So having the initial capital in the amount of 50 USD the trader was able to earn another 42,5 USD in 30 minutes and increase his account up to 92,5 USD.

2nd example

Hourly bull option

Let’s take an intraday EUR/USD chart for 28 July 2010 as example:

 A trader has 100 USD. He expects increase of EUR/USD rate at the 1 point from 9:10 until 10:10 a.m. The trader buys an “Hourly bull” option priced at 100 USD. EUR/USD rate arrives at the 2 point at 10:10. The currency rate at the 2 point is higher than at the 1 point. Trading conditions are met therefore a trader gets a profit.
 In this example the profit from transaction is equal to = 100 * margin of profit. Margin of profit is 1.85 for this type of option. It follows that a total profit from the transaction is = 100 * 1,85 = 185 USD.
 Let’s sum up. The trader purchased the option priced at 100 USD. The option made a profit in the amount of 185 USD. Net profit from the transaction is = 185 - 100 = 85 USD. So having the initial capital in the amount of 100 USD the trader was able to earn another 85 USD in an hour and increase his account up to 185 USD.

  Practice account

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