compare exchange rates Because foreign exchange swaps usually entail the purchase of 1 currency and the sale of an additional it is possible to revenue whether or not the trade rate moves up or down. The secret is merely to purchase and market the correct forex at the right time. The easiest way to understand just how you can profit from foreign exchange swaps as the exchange charge moves up and down is to look at an example of each. Let's start by thinking about how you may profit when trade rates transfer up. Let's presume that you believe that the United kingdom Pound is going to rise in opposition to the US Dollar and that you can currently buy GBP/USD at 1. 9340. Let's also assume that you are trading in regular interbank lots of 100,000 so that 100,000 United kingdom Pounds will presently price 193,400 US Dollars. In essence to open up a trade for a regular lot you will require to borrow 193,400 US Dollars and this amount will require to be repaid when you close out your place. We will not digress from the objective of this article to discuss the concept of borrowing to fund Forex purchases but, suffice it to say, that the vast majority of trading is carried out using borrowed funds making use of the capability to use leverage when Forex trading. Now let's presume that your perception that the Uk Pound would rise in opposition to the US Dollar is right and that the price moves one hundred pips to a charge of one. 9440. The 100,000 United kingdom Pounds which you purchased are now really worth 194,400 US Bucks and can be offered to repay the original borrowing, leaving you with a revenue of 1,000 US Bucks. In reality it is not quite this easy simply because there will be costs concerned in this transaction, but this does show the principle of profiting when the trade rate moves up. Now let's flip our interest to profiting when the trade charge moves down. Let's assume that you think that the Uk Pound is going to drop against the US Dollar from its present charge of GBP/USD = 1 buy euros. 9340. In other words, you think that the United kingdom Pound is going to buy fewer US Dollars. In this situation you will place an order to sell one hundred,000 Uk Pounds at a price of 193,four hundred US Bucks. In other words you will borrow 100,000 United kingdom Lbs and market them for 193,four hundred US Dollars. Again we will assume that your perception was correct and that the rate drops by 100 pips to GBP/USD = 1. 9240. At this point you near your position by buying back and repaying the one hundred,000 United kingdom Lbs which you originally offered which will now cost you 192,four hundred US Dollars, leaving you with a revenue of 1,000 US Dollars. Again this example ignores any expenses involved in the trade, but nevertheless demonstrates the principle of profiting from a downward motion in trade prices.