Review Question
In a spot EUR/SGD quote of 1.7394/98, the price taker wants to buy EUR. What should the price taker say?
- Mine
- Yours
- Paid
- Given
Answer:
(1) Correct. The price taker says “mine” in order to buy the base currency (EUR) at the offer price of 1.7398.
Topic 2: Managing Spot Positions
Open & Square Positions
- Taking a Position
- Making a Profit
Position Control
- Trading Limits
- Impact of FX Spread
- Calculating Profit & Loss
- Average Rate
- Marking-to-Market
- Shading the Price
- Stop-Loss Orders
- FX Risk Management
Open & Square Positions
Once a currency has been bought and another currency sold, a position is said to have been taken. The position is said to be “long” on the currency that has been bought, and “short” on the currency that has been sold.
The different positions that can be taken include:
Net Long or Overbought Position
In this case currency inflows are larger than outflows, that is, purchases exceed sales.