4

This morning I made a large percentage profit on a position that the Japanese Yen was going to be strong. It seems that the estimate was correct, but I made much more money than expected. I more than doubled my entire portfolio. Was it a market anomaly that the USD/JPD rate dropped so low a few hours ago, could it have been random, or why did I make so much money?

I was short selling, what risk did I actually take when winning this much?

  • 1
    I hope you since logged out of the session whose ID is mostly visible in the screenshot you shared. – Chris W. Rea Jun 16 '16 at 11:52
  • 3
    Note that the question "How much risk?" should be asked before you invest, not afterwards. Be thankful that you learned this lesson with positive results instead of negative results. If you don't understand what exactly you are investing in, you shouldn't invest in it. – Grade 'Eh' Bacon Jun 16 '16 at 19:10
  • Wondering if this is a real question, or just spam for that spread-betting company. – jwg Jan 4 '17 at 13:23
  • @jwg Neither one? I don't recommend that company BTW. The question is not very specific and depends on many variables. It's true that I didn't expect such a profit from such a position. An answer might be that I used leverage much more than I would with a normal bank where profits are not like that. I can also edit the question and mask the company if you really care but I don't think you care. – Niklas Rosencrantz Jan 4 '17 at 16:26
  • @DacSaunders seems like you are genuine, sorry. Just wondering because spam and referral bait for those kind of companies is all over the place. – jwg Jan 5 '17 at 14:16
15

If you didn't have a stop loss set (or trailing stop loss) then an equally random spike in the other direction could have obliterated your account and put you in debt to the broker, depending on the terms of that broker, as these are highly leveraged positions.

Market anomaly? If your currency bet was unrelated to the fed's interest rate decision today, then you should probably just stop trading.

  • 2
    "If your currency bet was unrelated..." Also OP - if you didn't understand that selling short exposed you to greater risk than your initial investment, you should stop trading. I don't mean that to be insulting, but for your own benefit, please don't invest in methods that you don't understand. – Grade 'Eh' Bacon Jun 16 '16 at 19:11
  • 4
    It's also important to note that a long position also carries the risk of losing more money than is in the account due to the highly leveraged nature of forex trading. Typical margins are 50:1 or more. – TainToTain Jun 16 '16 at 20:31
  • @TainToTain its good that you spelled it out, but it is important for others to understand that my post already said that – CQM Jun 17 '16 at 5:25
  • @CQM Sorry, that was supposed to be a reply to Grade 'Eh' Bacon. Apparently I forgot to put the @ in front. – TainToTain Jun 20 '16 at 22:27

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.