Let us take a more detailed look at profit generation with the specific example of making a transaction.

Let us take a chart history of USD/JPY quotation fluctuation. At point “A” the rate was 111.01, after a period of time – 109.71 (point “B”). The difference between quotations at section A-B equals 130 points (111.01 minus 109.71). In general, it is just a minor difference if to be calculated in relative terms (about 1%). But for the trader operating at Forex, even such a minor rate fluctuation can bring a considerable profit. If a trader forecasts at point “A” that the rate will “decrease”, he/ she will effect a sale (operation SELL), and after some time, at point “B”, he/ she will close the position (closing transaction) by reverse operation effecting a purchase (operation BUY). The reported profit: 130 points. Also, on real accounts the spread (the difference in prices between the Bid and the Ask quote) that can average from 1 to 10 points on different currency pairs should be taken into consideration. In this example, the spread volume is not taken into consideration for more convenient calculations What is the profit made from this transaction in money terms? Let us assume that a trader used 100$ for the transaction. At the moment of BUY operation the dealing center provided him/ her with the automatic credit (leverage) 1: 100, i.e. he/ she could sell currency (at point A) not for 100$ but for 10000$! At the rate of 111.01 yens for 1 dollar this equals 1110100 yens. And at point B he/ she buys dollars for this amount at the rate 109.71, having earned 10118.49 $. At the moment of closing position the credit is automatically closed (the sales proceeds are divided by 100 according to the leverage) and a trader makes the reported profit of 101$ from the transaction. Compared with the start amount used for the transaction (100$), his/ her profit equals 100% from the amount, he/ she has doubled it!

So, we can see that even at the rate fluctuation of 1%, traders manage to make a considerable profit. Sometimes the rate fluctuations can be 200-300 and more points a day.