Community Forex Questions
Example of tom-next
Assume you decide to trade the EUR/USD pair and open a position to buy €100,000 and sell USD at 1.1366. To keep your position open beyond the expected delivery date, you would need to sell your €100,000 the next day (tomorrow's date) and then repurchase it at the new spot price.
Your EUR/USD position is currently priced at 1.1378/1.1379: 1.1378 to sell and 1.1379 to buy. The new spot rate, however, is one point higher at 1.13795/1.13805. To roll your position, you would sell at 1.1378 and then buy back at 1.13805, for a total of 2.5 points.
In this case, we'd say the tom-next rate is 0.5/2.5. And, because a €100,000 EUR/USD trade is worth $10 per point, rolling this position would cost 2.5 x $10 = $25. (plus a small admin fee).
Your EUR/USD position is currently priced at 1.1378/1.1379: 1.1378 to sell and 1.1379 to buy. The new spot rate, however, is one point higher at 1.13795/1.13805. To roll your position, you would sell at 1.1378 and then buy back at 1.13805, for a total of 2.5 points.
In this case, we'd say the tom-next rate is 0.5/2.5. And, because a €100,000 EUR/USD trade is worth $10 per point, rolling this position would cost 2.5 x $10 = $25. (plus a small admin fee).
Mar 02, 2023 16:35