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Trade Currency Pairs real time making your virtual Portfolio and Learn the basic tricks of Trading
Trade Currency Pairs real time making your virtual Portfolio and Learn the basic tricks of Trading
All calculations of Margin Wallets, Market to Market and Profit and loss are all taken in Dollar terms due to the nature of the Forex Markets, where every Currency Pair is traded with respect to US Dollar.
Total Fictional money in the account.
Fictional money needed to make any trade. By Default every trade will require 10% of the “ Notional value of Trade” . For Eg, If a Trade is initiated for USD 1000,000 ( 1 Million) then the margin needed to be available in the wallet is Minimum of 10% of USD 1000,000 = USD 100,000
Only in case of 4 Currency pairs Viz EUR/USD, GBP/USD, AUD/USD and NZD/USD ( called Direct Pairs), the margin calculation will be as under:
For all the Other currency pairs ( Indirect Pairs) , margin calculation is as below:
This is the value of the trade undertaken at current market levels. For eg:
If the trade was: Bought USD/INR 1 Million at 76 and say the current level is 77, then the Marked to market value of the trade is
(Sell-Buy)* USD 1000,000 = (77-76) * 1000,000= INR 1000,000
But , in the app all the calculations are with respect to Dollar so the MTM in Dollar terms is
1000,000/ 77 = USD 12,987
In case of In-Direct Pairs, the calculation of differential in rates yields the results in the other currency in the pair and to get the result in Dollars, it requires to be divided by the currency exchange rate of the pair.
Or
If Original trade was Sold EURUSD 1 Million at 1. 09 and say current level is 1.11 then the Marked to Market of the trade is
(Sell-Buy)* EUR 1000,000 = (1.1100 – 1.0900 ) * EUR 1000,000= USD 20,000
In case of Direct Pairs, the calculation of differential in rates yields the results in Dollars Only
This is the PnL of the trade booked when the initial trade is Unwound or exited or squared at current market levels. For eg:
If the trade was: Bought USD/INR 1 Million at 76 and say the exited/Unwound/Cancelled price level is 77, then the P&L of the trade is
(Sell-Buy)* USD 1000,000 = (77-76) * 1000,000= INR 1000,000
But , in the app all the calculations are with respect to Dollar so the MTM in Dollar terms is
1000,000/ 77 = USD 12,987
In case of InDirect Pairs, the calculation of differential in rates yields the results in the other currency in the pair and to get the result in Dollars, it requires to be divided by the currency exchange rate of the pair.
Or
If Original trade was Sold EURUSD 1 Million at 1. 09 and say Exited/Unwound/Cancelled level is 1.11 then the P&L of the trade is
(Sell-Buy)* EUR 1000,000 = (1.1100 – 1.0900 ) * EUR 1000,000= USD 20,000
In case of Direct Pairs, the calculation of differential in rates yields the results in Dollars Only
Used Margin = Trade Margin on all the outstanding trades, which is 10% of the Trade Volume + any Negative Marked to Market + Any loss booked on the trade.
Eg: Deal done for USD/INR 1 Million
But If
Eg: Deal done for USD/INR 1 Million
Total Margin Wallet – Used Margin
Suppose the initial wallet was USD 1000,000
Available Margin = USD 1000,000 – USD 100,000 – USD 85,000 – USD 50,000 = USD 765,000
Once any trade is Unwound, the corresponding trade margin is released and added back to the Wallet.
For Eg, If a Trade is initiated for USD 1000,000 ( 1 Million) then the Trade margin is 10% of USD 1000,000 = USD 100,000
Once this trade is exited/cancelled/unwound then this USD 100,000 is added back to the Margin Wallet.
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