Quote:
Originally Posted by ppp
Wow, thanks for the extensively enlightening reply Sam.. It really shed some light for me.
I still have some questions though. You mentioned that the trade is 2-day forward exchange (that we agreed to do the exchange in 2 days). So what actually happens when I held my position overnight? For example, I buy EUR/USD and keep it overnight. So the broker will actually sell EUR/USD at the end of the day, and buy the EUR/USD in the next opening day?
What does it do to me if for example I bought EUR/USD and keep it open for more than 2 days? Do I lose money or something?
I'm still confused about the profit/losses though. For example, I have $500 in my account, and I buy EUR/USD (that costs me $20 for 0.1 lot using 1:500 leverage. During 1.5000 rate, it would be around $0.67 per pips right?). So after this trade, I will have $480 left in my account right? And when I sold it at 1.5010, I would get 10 pips; it's equal to $6.7 right? After this, how much money do I have in my accounts? Is it $506.7 ($500 + 10 pips profit/$6.7) ? Or is it $486.7 ($480 + 10 pips profit/$6.7) ?
Can you also explain the short-trading using balanced-simulation like the above story?
|
Some brokers do a visible rollover in which you actually can see the close of your position and then a reopening of it. The result is generally the loss of the spread, since you would buy at the offer and sell at the bid. Other brokers do anything so visible (no close and re-open), but you do see carry interest charged or paid to your account.
You have to stop using the terms bought and sold, buy and sell. As I noted before, you never take possession of anything. You don't actually buy. You go long, or you go short. You exit a long or you exit a short. The margin you put up for a EUR/USD is not something you pay. It isn't a cost. It's just funds set aside to cover the broker in case you take an oversized loss. Your profits and losses are added to/subtracted from you overall balance.
And your math is off. A pip on a mini lot (0.1) is $1 for EUR/USD.