Potential Profits

What is the contract size of each trade and how do you calculate profits ?

The minimum size of a contract of the major currencies is the value of $100,000 USD (1% margin=$1000). But the value of each currency relative to the USD is different each minute, so the actual US dollar value fluctuates, and that's where you make your profit. The usual contract size is about 100,000 Euros, 62,500 pounds, 187,500 Swiss Francs, 12.5 million Yen, all with an initial margin of $1000 on deposit, making it the cheapest way to own large quantities of assets.

For example, today Mr. and Mrs. Joe Public buy a FOREX contract of £62,500 at the exchange rate of $1.4225 (USD) per pound, while using for that purchase only US dollars of $1,000. Five hours later poor US economic indicators are released, the Fed lowers interest rates again, NYSE and NASDAQ both tumble, and the dollar falls 1.5 cent against the pound sterling.

The price of the pound is now worth $1.4375. After discussion with their broker, Mr. and Mrs. Joe Public quickly decide to close their contract, taking $937 profit and almost 100% return of their initial investment of only $1000 in buying one contract of £62,500 five hours ago. $1000 will enable you to buy (or sell) one contract of any major currency, making FOREX the quickest way to make a profit.