Forex Trading Examples

Updated: Nov 30, 2019




Compiled below are Forex trading examples. Please note that these are just examples; be aware that trading Forex is speculative and involves significant risk.


USD/CHF Trading Example

An investor deposits $10,000 in a Trading Account.

The account is set to 0.5% margin or 200:1 Leverage. This means that for one lot opened of 100,000 the investor must maintain at least $500 in Margin (= 100,000 x 0.5%).

The investor expects the US dollar to rise against the Swiss franc and therefore decides to buy $ 100,000 of the USD/CHF pair.

Day 1 – USD/CHF Quotes = 1.0147-1.0150

The market quotes USDCHF 1.0147-1.0150. The investor buys USD at 1.0150 against CHF.

By doing this, he commits in the simultaneous buying of USD 100,000 (1 lot of $100,000) and the selling of CHF 101,500 (= $100,000 x 1.0150) by using $500 as a Margin (= $100,000 x 0.5%) and borrowing USD 99,500 from Marketsforu  (= $100,000-$500)

(1) Balance = Deposit ($10,000) + Sum of Realized Profit & Loss ($0) = $10,000

(2) Equity = Balance ($10,000) + Sum of Unrealized Profit & Loss ($0) = $10,000

(3) # Lots open = Investment ($100,000) / Value of one lot ($100,000) = 1 lot

(4) Used Margin = # Lots open (1) x Value of one lot ($100,000) x Margin (0.5%) = $500

(5) Usable Margin = Equity ($10,000) – Used Margin ($500) = $9,500

Day 2-USD/CHF Quotes = 1.0300-1.0303

The US dollar has risen and the USD/CHF quotes 1.0300-1.0303.

The investor decides to take his profit and enters a sell market order in the Market trading platform. The order is executed instantaneously and the investor sells 1 lot of USDCHF at 1.0300.

By doing this, he commits in the simultaneous selling of USD 100,000 (1 lot at $100,000) and the buying of CHF 103,000 (= $100,000 x 1.0300).





(1) Balance = Deposit ($10,000) + Sum of Realized Profit & Loss ($0) = $10,000

(2) Equity = Balance ($10,000) + Sum of Unrealized Profit & Loss ($0) = $10,000

(3) # Lots open = Investment ($100,000) / Value of one lot ($100,000) = 1 lot

(4) Used Margin = # Lots open (1) x Value of one lot ($100,000) x Margin (0.5%) = $500

(5) Usable Margin = Equity ($10,000) – Used Margin ($500) = $9,500

Day 2-USD/CHF Quotes = 1.0300-1.0303

The US dollar has risen and the USD/CHF quotes 1.0300-1.0303.

The investor decides to take his profit and enters a sell market order in the Market trading platform. The order is executed instantaneously and the investor sells 1 lot of USDCHF at 1.0300.

By doing this, he commits in the simultaneous selling of USD 100,000 (1 lot at $100,000) and the buying of CHF 103,000 (= $100,000 x 1.0300).




The dollar side of the transaction involves a credit and a debit of USD 100,000, the investor's USD account will show no change.

The CHF account will show a debit of CHF 101,500 and a credit of CHF 103,000. This results in a profit of CHF 1,500 = approx. USD 1,456 (= CHF 1,500 / 1.0303) which represents a 14.56% profit on the deposit of USD 10,000.



Balance = Deposit ($10,000) + Sum of Realized Profit & Loss ($ 1,456)= $11,456

(2) Equity = Balance ($11,456) + Sum of Unrealized Profit & Loss ($0) = $11,456

(3) All positions are closed, therefore # Lots open = 0

(4) Used Margin = # Lots open (0) x Value of one lot ($5,000) x Margin (0.5%) = $0

(5) Usable Margin = Equity ($11,456) – Used Margin ($0) = $11,456

Note: For simplicity's sake, we have disregarded the effect of difference in interest rate between USD and CHF over the 2-day period which would have marginally altered the profit calculation.

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Trading in leveraged currency contracts comes with substantial risk. You must be aware of these risks before opening an account to trade. High leverage amplifies gains as well as losses, leading to potential loss of the entire account balance. Trading in leveraged currency contracts may not be suitable for every investor. Never speculate using money that you cannot afford to lose.

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