Trading Scenario – Trading Falling Prices
If, on the other hand, you believe that the euro will weaken against the dollar, you'll want to sell EURUSD.
| • You sell euro | We quote EURUSD at a Bid price of 0.9875 and Askprice of 0.9880 and you decide to sell euro 100,000 at aBid price of 0.9875. |
| • The market moves in your favour | The euro weakens against the dollar and the EURUSDis now quoted at bid 0.9744 and ask 0.9749. |
| • Now you buy back your euro | You buy EUR at an ask price of 0.9749. |
| • Your profit/loss is then | Sell price-buy price x size of trade (0.9875 minus 0.9749) multiplied by 100.000 = USD 1260 Profit |
Remember that trading EUR 100,000 as we have done in our examples, does not mean that you have to put up euro 100,000 yourself. On a 2% margin means that you have to deposit 2.0% of euro 100,000, which is euro 2,000 on margin as a guarantee for the future performance of your position.
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