$1.45 for 1 GBP. It used to be $2.00. If it went back to $2.00, it would be an increase of 38%. Does my investment really just increase in value to 38%? What sort of hidden fees are there, etc. And how likely is it that GBP would even return to that value.
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February 1st, 2009 at 6:47 am
Yes, your investment would increase by that amount, and there is nothing very hidden in the process, although it would be a capital gain for tax purposes.
Whether the GBP will rise again to that level is anyone's question. But, against the dollar, it is possible given what is happening today that the dollar could depreciate enough against the pound to make it happen. All you would be doing is to preserve the purchasing power of your investment (if you are in dollars) but that is better than losing 38% of it.
February 1st, 2009 at 6:47 am
The leverage for Forex is 100:1. This means that you only need a $1000 to control an amount $100000.
1 pip is 0.0001 and is worth USD $10 for GBP/USD currency pair. If GBP/USD goes up from 1.45 to 2, it will be a profit of 5500 pips * 10 = USD $55000. This makes the return to be 5500% for the initial margin of USD $1000.
There is no commission for Forex but you need to take care of the bid/ask spread in the trade. When you roll over to the next day, you will either receive interest or pay interest depending on which currency have the higher interest rate. If you buy the currency with the higher interest, you will receive interest when you roll over.
IMHO, it is unlikely will GBP/USD return to $2 level in the short term as the economy outlook is uncertain.
February 1st, 2009 at 6:47 am
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February 1st, 2009 at 6:47 am
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