Position currency resolution easily

Aug 6th, 2022
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How to position currency resolution

5 out of 5
25 votes

okay so in this video im going to run through longer short positions in currencies um so lets start with the following situation so you have two bank accounts in different currencies and for this example were just going to say we have one in us dollars and one in euros and they both start off empty and say for example the current rate for euro dollar is 1.3 so what you could do you could withdraw 130 from your us dollar based account convert it to euros via the euro dollar exchange rate and then place the 100 euros into your euro bank account so now basically youre overdrawn in your us dollar account and you have um some euros in your euro account um so for the purposes video were just going to ignore overdraft fees and interest rates and so on it turns out in the interbank market there will be a obviously youll pay interest on cash you hold an account and your um so youll be paid interest on cash you hold on account and you have to pay interest on an overdrawn account and the

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Short selling currency is the same as opening a position to sell a currency pair. When a trader speculates that the value of a currency will fall, they can open a position to sell the currency. If the price of the currency falls in value, the trader can make a profit relative to the degree that the price falls.
What is a position in forex trading? A forex position is the amount of a currency which is owned by an individual or entity who then has exposure to the movements of the currency against other currencies. The position can be either short or long.
Currencies are traded in pairs, so that in every trade one currency is exchanged for another at a given rate, determined by the market. These pairs look something like EUR/USD = 1.08. This means that one Euro buys USD $1.08. The base currency appears first and the quote currency (or counter currency) second.
Open foreign currency position means an excess of assets (including off-balance sheet forward purchase contracts) over liabilities (including off-balance sheet forward sales contracts) (a long position) held by a financial institution denominated a foreign currency, or an excess of liabilities (including off-
Being long means buying a currency against another currency. Being short means selling a currency against another. If a trader goes long EUR/USD, he or she buys Euros and sells US dollars. Buying a currency is closely associated with taking a long position in that currency.
Position Limits for Foreign Portfolio Investor Gross open position across all contracts shall not exceed 6% of the total open interest or USD 10 million, whichever is higher.
For each netted currency, the USD equivalent is calculated based on the pre-trade conversion rate. For a single settlement day, the NOP is the sum of all netted long exposures plus the sum of all netted short exposures (single counted). The overall NOP exposure is the sum of all individual settlement day NOP exposures.
A foreign exchange long position in FX forward markets is a commitment to buy a specified amount of one currency against payment in another currency at a fixed future date, known as the value date, at a specified exchange rate.

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