Foreign Exchange Trades

Foreign Exchange Trades
If the Euro/USD is trading at 1.2400/03 and you buy Euro at 1.2403, you are “long” Euro and “short” the US Dollar. In another trade, you decide to sell Japanese Yen, if the USD/JPY is trading at 107.20/23 and you buy at 107.23 you would be long the US Dollar and short Japanese Yen. Let’s assume that the Euro goes higher to 1.2537 but the US Dollar falls to 106.76. How did you do on these two trades?
Your profit and loss for the two transactions would be as follows: On the Euro trade you bought Euro 100,000 at 1.2403 and sold Euro at 1.2537 your profit is .0134 or $1,340 (.0134 x Euro100,000 = $1,340). On the USD/JPY trade you bought $100,000 at 107.23 and sold it at 106.76 your loss on this trade is .47 or $440.24 ($100,000 x 0.47 = JPY47,000 / 106.76 = $440.24). Your net gains on the two transactions is a profit of $899.76 ($1340 - $440.24 = $899.76).