I'm looking at example 2 here:
http://fxtrade.oanda.ca/analysis/profit-calculator/how
For the 6000 JPY loss we are dividing by the market bid, correct? What I don't quite understand is why it's not the ask. I verified this is how it works in fxtrade, but I just don't quite understand why. Aren't you trying to buy back USD and sell JPY? To do that, don't you need to use the market sale/ask price of USD/JPY?
Also, I tried this with a different type of pair, like EUR_AUD and AUD_USD. Let's say I end up with a profit of 1000 AUD. There, I divide by 1 / (ask price of the AUD_USD) .. Correct? I'm not sure I understand why this one is different, ie, why it's the market ASK now and not the BID price for AUD_USD
Does anyone have an explanation or links that might explain this further? Thanks!!
http://fxtrade.oanda.ca/analysis/profit-calculator/how
For the 6000 JPY loss we are dividing by the market bid, correct? What I don't quite understand is why it's not the ask. I verified this is how it works in fxtrade, but I just don't quite understand why. Aren't you trying to buy back USD and sell JPY? To do that, don't you need to use the market sale/ask price of USD/JPY?
Also, I tried this with a different type of pair, like EUR_AUD and AUD_USD. Let's say I end up with a profit of 1000 AUD. There, I divide by 1 / (ask price of the AUD_USD) .. Correct? I'm not sure I understand why this one is different, ie, why it's the market ASK now and not the BID price for AUD_USD
Does anyone have an explanation or links that might explain this further? Thanks!!