Foreign exchange futures trading method

What is foreign cashbackforexreview cashback forex trading method Foreign exchange futures trading method is a method for importers and exporters to prevent foreign exchange risk by signing foreign exchange futures trading contracts Types of foreign exchange futures trading method According to the direction of the enterprise buying and selling foreign exchange futures contracts, it can be divided into buy hedging and sell hedging ( cashbackforexbtc) buy hedging buy hedging is to buy the same amount as the spot market, but On March 1 of a year, a cashback forex.S. importer imports a batch of agricultural products from Canada, worth 500,000 Canadian dollars, and pays for the goods after six months. Assuming that the spot exchange rate on March 1 is CAD1=USD0.8460, the importer buys five Canadian dollar futures contracts for September delivery to prevent the cost of imports from rising due to the appreciation of the Canadian dollar. Contract (each contract size of 100,000 Canadian dollars), the price of CAD1 = USD0.8450 six months later, the Canadian dollar really appreciated, the spot rate of CAD1 = USD0.8480, the importer in the futures market at the exchange rate of CAD1 = USD0.8490 to sell 5 copies of 9 to cover the losses in the spot market, the month of delivery of the Canadian dollar futures contracts to close positions, through Futures transactions so as to achieve the purpose of eliminating or reducing foreign exchange risk see table table Buy hedge spot market foreign exchange futures market March 1 SPOT CAD / USD: 0.8460 If at this time to buy 500,000 Canadian dollars to pay 500,000 × 0.8460 = 42.3 million U.S. dollars to buy five September expiry of the Canadian dollar futures contract price of CAD / USD: 0.8450 value of 42.25 million U.S. dollars September 1 SPOT CAD / USD: 0.8480 at this time to buy 500,000 Canadian dollars to pay 500,000 × 0.8480 = 42.4 million U.S. dollars to sell five September expiry of the Canadian dollar futures contract price CAD / USD: O. 8490 worth 42.45 million U.S. dollars loss of 1,000 U.S. dollars profit of 2,000 U.S. dollars (2) sell hedge sell hedge is to Sell a futures contract with the same quantity as the spot market, but in the opposite direction, in order to buy futures contracts in the future to hedge the risk A U.S. company exports a batch of goods to a British company on May 1 of a year, worth 500,000 pounds, one month after receiving the payment assuming that the spot exchange rate on May 1 is CBP1 = USD1.6120, in order to prevent economic losses caused by the depreciation of the pound, the British company to CBP1 = USD1.6100 exchange rate in the foreign exchange futures market to sell eight September delivery of the British pound futures contracts (each contract size of 62,500 pounds) six months later the pound really depreciated, the spot rate of GBP1 = USD1.4620, the company to GBP1 = USD1.4500 exchange rate to buy eight September delivery of the British pound futures contracts to close the position. Through futures trading to make up for the losses in the spot market, so as to eliminate or reduce foreign exchange risk purposes see table table sell hedge spot market foreign exchange futures market on May 1 SPOTGBP / USD: 1.6120 If at this time sell 500,000 pounds to get 500,000 × 1.6120 = 80.6 million U.S. dollars sell 8 June expiry of the pound futures contract price GBP / USD: 1.6100 USD: 1.6100 worth 80.5 million U.S. dollars June 1 SPOTGBP / USD: 1.4620 at this time to sell 500,000 pounds to get 500,000 × 1.4620: 731,000 U.S. dollars to buy eight June expiry of the British pounds futures contract price GBP / USD: 11.4500 worth 725,000 U.S. dollars loss (less income): 7.5 million U.S. dollars profit of 80,000 U.S. dollars Example of the use of foreign exchange futures trading method of $ 80,000 An American importer on June 1 of a year to import a batch of goods worth 1.25 million pounds, and agreed to pay on September 1, assuming that the June 1 spot exchange rate between the pound and the U.S. dollar GBP1 = USD1.5000 to prevent the risk brought about by the appreciation of the pound, the importer to buy 20 September expiry of the pound futures contracts (each contract 62500 pounds, 20 copies of a total of 1.25 million pounds), the transaction price of GBP1 = USD1.5200 to September 1, when the payment of foreign exchange, the spot exchange rate of pounds against the U.S. dollar to GBP1 = USD1.5500. 2009 expiry of the pound futures transaction price to GBP1 = USD1.5510 At this time, an importer in the spot market to buy 1.25 million pounds, pay the U.S. dollar 1.5500 × 125 = USD1.5500? 5500 × 125 = 1.93.?5 million, more than the June 1 spot exchange rate than the expenditure (1.5500-1.5000) × 125 = 6.25 U.S. dollars, but at the same time the importer in the futures market to sell 20 futures contracts due in September, can make a profit (1.5500-1.5100) × 125 = 5.125 million U.S. dollars break even, the importer actually more Expenditures 6.25 - 5.125 = 1.125 million U.S. dollars but if you do not use foreign exchange futures hedging, the exporter will expend 6.25 million U.S. dollars on the contrary if the pound exchange rate in the expiration date when the decline, then the foreign exchange spot market profits, futures market losses, the two offset, the same can be achieved to reduce foreign exchange risk purposes