|
|
 |
| Welcome to AFA Markets ... |
 |
You can open a new position for just 2% of the contract value.
|
|
|
You decide to go long of the US dollar against the Swiss Franc. Our quote is 1.2310/1.2314, and you buy five contracts (the equivalent of US$500,000) at 1.2314. To open the position you supply a deposit of just US$500,000 x 2% = US$10,000
|
|
|
While the position remains open, your account is debited or credited daily to reflect the effect of the interest rate differential between the US dollar and the Swiss Franc.
US dollar interest rates are higher than Swiss Franc rates, and you receive interest for holding a long position in the higher-rate currency, so the interest adjustment is credited to your account.
|
|
|
Three weeks later, USD/CHF has risen to 1.2414/1.2418, and you take your profit by selling five contracts at 1.2414. Your profit on the trade is calculated as follow:
|
|
| |
Closing transaction |
US$500,000 (5 contracts) x 1.2414 = $620,700 |
Opening transaction |
US$500,000 (5 contracts) x 1.2314= $615,700 |
Profit on trade |
$5000 |
To calculate the overall profit, you also have to include the accumulated daily interest rate adjustments and the commission.
You may choose the currency in which you wish to hold your account balance. Conversions will be made at a rate no less favourable than 1% below or above (as the case may be) the interbank spot exchange rate at the time of conversion.
|
|
|
|
|
|
|
|
|
|
