Example of Making Money on a Dollar to Euro Trade

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Part of a short series of articles on using MetaTrader4, written on request. This does not mean I endorse trading, MetaTrader4, or that I’d do this because I wouldn’t. I design and build IT systems, and that’s what I’ll stick to, ta. This article is “Example of Making Money on a Dollar to Euro Trade”.

Let’s say you want to trade dollars for euros and profit from this trade. Here’s a step-by-step example:

Initial Situation:

  • You have $1,000.
  • The current exchange rate is 1 dollar = 1 euro.

Step 1: Buying Euros

  • With $1,000, you can buy 1,000 euros because the exchange rate is 1:1.

Step 2: The Exchange Rate Changes

  • After some time, the exchange rate changes. Now, 1 euro is worth 1.2 dollars. This means the value of the euro has increased.

Step 3: Selling Euros Back to Dollars

  • You decide to sell your euros and convert them back to dollars.
  • Since the new exchange rate is 1 euro = 1.2 dollars, each of your 1,000 euros is now worth 1.2 dollars.

Calculation:

  • 1,000 euros x 1.2 dollars/euro = $1,200.

Profit:

  • You initially had $1,000.
  • After selling your 1,000 euros, you have $1,200.
  • Your profit is $1,200 – $1,000 = $200.

Summary:

  • You bought euros when the exchange rate was 1:1.
  • The value of the euro increased.
  • You sold the euros when the exchange rate was 1 euro = 1.2 dollars.
  • You made a profit of $200 from this trade.