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Foreign Currency Trading

Foreign Currency Trading


To trade in foreign currencies one has to be conversant with the current exchange rates in the financial market. I chose to trade in Euro (€) as it is relatively available and acceptable in most countries. On July 1 2015, the Euro was trading at 1.135 in the financial markets (Yahoo Business Finance, 2015). The portfolio balance between the Euro and the British pound had marginal differences hence I opted to deal only with the Euro. The total amounts in Euros after conversion amounted to €898,069.20. On July 2, the dollar gained marginally against the Euro and a loss of 0.907% was registered. On 6 July the loss increased to 1.257% and the one million deposited decreased to an equivalent of $987,427.10 dollars. On July 20 the loss continued further and 2.739% was lost, the equivalents of dollars lost were $27,391.06. The amounts invested in dollars were 1000,000 but now according to the exchange rates the equivalent amounts in dollars that was in the bank amounted to $972,608.90. The loss trend continued till early September 2015 when the trends turned slightly better. On September 13, the Euro gained marginally against the dollar. The Euro increased by 0.234%. The amounts invested amounted to an equivalent of $ 1,002,335 when converted at the rates that were prevailing on that day.

On August 25, the Euro was at its best performance against the dollar in the last two months and it gained by 4.023%. The total amounted invested amounted to an equivalent of $1,040,234 hence a gain of $40,234. I decided to sell the Euros for the US dollars as it was the best period to sell the dollar. However the best time to invest in the Euros would have been on July 20 when the dollar was trading at a low of €1.083 for every dollar and sell on August 25 at a high of €1.1583 and it would have resulted in total earnings of 6.95% or $1,069,529.

On August 26, i converted all the earnings to Australian dollars which amounted to AUD 1,463,663. On August 28, I sold all the Australian dollars and obtained a profit of 0.97% on the transactions. After paying the transaction fees amounting of $301.755, i remained with $1,049, 955 which i converted to British pounds on the same day. On August 31, I made my last transaction and sold all the British pounds and earned a profit of 0.023% from the two day’s transaction. The total amount of earnings from the two months transactions amounted to

$1,050,194 after deducting a transaction fee of 0.75%. The total profits were $50,194.00 dollars or 5.02% from the principal amount.

Calculations for the last five days of trading

1040234 – 1000,000 = 40234 * 0.75% = 301.755 (40234-301=39932.25). On August 26 i
Converted the total amount after deducting the transaction cost of 0.75%
           to Australian dollars which amounted to AUD 1463663
Sold all the AUD and obtained a profit of 0.97% which totaled to 1,049,955 after
Paying the 0.75% transaction fees.
On Aug 28 converted all the earnings to British Pounds and obtained a total of
₤602,937.30. On August 31 I sold all the pounds and obtained a profit of 0.023%
On the earnings. The total amount after deducting the transaction fee amounted
to $1050194.

Calculations for the month of July and the first twenty-five days of September

 Convert the $1000,000 into Euros on 1 July 1 rates are €1= $1.1135 = € 898069.2
 DateEUR/USDAmt – €Amt – $% ChangeEUR/USDAmt – €Amt – $% Change

N/B The initial investment in July was a bad investment hence the investment was tied till the recovery of the dollar in early September.


Yahoo Business Finance (2015) Retrieved September 16 from

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