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Can Currency Pair Go Zero ?

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  • Post #21
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  • Apr 21, 2007 11:37pm Apr 21, 2007 11:37pm
  •  HalifaxCB
  • | Joined Apr 2007 | Status: Ich habe genug | 551 Posts
Makanforex - you might find this article on hyperinflation of interest:

http://en.wikipedia.org/wiki/Hyperinflation
 
 
  • Post #22
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  • Apr 23, 2007 12:31pm Apr 23, 2007 12:31pm
  •  Gwan
  • | Joined Feb 2007 | Status: Small is beautifull | 1,368 Posts
so, if the value is soo big or so small, that the decimal is added or deducted, what will happened to our open position? will it multiplied or divided by 10?
 
 
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  • Apr 23, 2007 7:47pm Apr 23, 2007 7:47pm
  •  Bemac
  • Joined Jan 2006 | Status: Monarch o' the Glen | 5,561 Posts
Quoting Gwan
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so, if the value is soo big or so small, that the decimal is added or deducted, what will happened to our open position? will it multiplied or divided by 10?
Ignored
Your Open Position Equity would remain the same. What Would Change is the Contract Size.
 
 
  • Post #24
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  • Last Post: Edited at 1:45am Aug 5, 2007 1:21am | Edited at 1:45am
  •  GladysKnight
  • | Joined Jul 2007 | Status: Member | 21 Posts
Reminds me of that paradox of travelling from point A to point B.

If you are at point A and you want to end up at point B, then before you can arrive at point B, you have to first travel halfway there.

The pattern repeats, so that once again, from the halfway point on your journey, to get to your destination of point B, you can't get there without first getting halfway there.

And so, you see, theoretically and logically, you can never really get to point B at all, can you? No matter where you are, you can't go to point B directly, you must always go halfway first.

But in real life, of course, you do end up getting to point B, whether point B is your kitchen or a foreign country.

It's the same with a currency that could never have a zero value in theory. But in practice, it has a zero value, because in some sense and at some level, reality trumps logic.

By the same token, even if in theory you can never reach your bathroom from anywhere else in your home, the fact of the matter is that you can in fact get to your bathroom no matter what the logic says about it, and thank goodness for that!

P.S.

If you are using fixed fractional risk of your capital for each trade that you place, and if your broker never charges you any fees, then as your account value decreases, your position sizes decrease as well. As your account value shrinks, the value of each trade's risk shrinks as well. Following this logic, you could trade infinitely with only losing trades without ever ending up bankrupt; no matter how tiny your account gets, your next losing trade only draws down your tiny account by 1%!
Pip my ride.
 
 
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