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Currency Day Trading Examples PDF Print E-mail
The buying or selling of a currency within the same calendar day is known as currency day trading. In this case, all trades are completed in the same day and nothing is held overnight. The United States passed laws six years ago that enabled small investors and common men to participate in currency day trading; previously, only large banks and financial institutions and millionaires were engaged in the practice.
  • Example 1: A trader thinks the euro will gain value versus the dollar (EUR/USD is at 1.2150)
Let's say that the price of the euro-dollar (EUR/USD) pair is 1.2150 and a day trader, based on his strategy, gets a signal that the euro is going to continue to go up. The trader buys 100,000 EUR (1 lot) at 1.2155 (121,550 USD). If the trader's margin requirement is 2%, his margin deposit would be 2,000 Euros or 2,431 dollars. The trader automatically sets a stop loss of 25 pips based on his technical trading strategy. As the trader expected, the EUR/USD goes up to 1.2225 (on paper, everything works!). Assuming this meets the profit requirements of his day trading system, the trader sells the 100,000 Euros. He receives 100,000 x 1.2225 = 122,250 USD. Since the trader originally sold (paid) 121,550 USD for the Euros, his profit is 122,250 - 121,550 = 700 USD.
  • Example 2: A trader thinks the yen will appreciate in value versus the dollar (USD/JPY is at 108.65)

The price of the dollar-yen is dropping and is currently at 108.65. A day trader gets a sell signal based on his trading strategy. He sells 100,000 USD (1 lot) at 108.60 and receives 10,860,000 Japanese yen.

Assuming a 2% margin requirement, the deposit would be 2,000 dollars. Right after placing his trade, the trader places a stop loss of 30 pips based on his day trading strategy. The trader was right and the yen appreciates versus the dollar (dollar loses value relative to the yen), pushing the exchange rate down to 107.50. Satisfied with his profit, the trader sells the 10,860,000 yen at 107.50. He receives, 10,860,000 / 107.50 = 101,023 USD. Since he had originally paid (sold) 100,000 USD for the yen, his profit is 101,023 - 100,000 = 1,023.
 
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