What are the forward points?
Forward points relate to the difference between the rate of the spot and the pre -water rate in the foreign currency store. This difference is measured in a number of percentage points, also known as basic points, either added or deducted from the spot rate of currency trade. If points are added to the point rate, it is known as the Forward Body bonus. If the points are deducted from the spot rate, it creates what is called a forward discount. For example, the United States dollar (USD) and the European monetary unit known as Euro (EUR) would be one monetary pair. In some cases, the pairs are traded through additional shops in which no money in the future is exchanged among the parties, which is known as the due date. RD Forwabody enters the game when such forward shops are created.
When a forward shop is made, the front points are determined at the time and any Fluktuac is unchangedEMI market. This is one of the advantages of a forward trader that there is no uncertainty for trade, which can be caused by once or both currencies that grow or fall from their current value. The trade rate is locked at the time of the trade.
How much forward is involved in the store is determined by current and forward interest rates, how much time has passed between the time of trade and the date of its maturity and other market factors. Basic points that are essentially percentage points that represent the difference between the two currencies in the currency pair are a determining factor in measuring the trade. Either premium, which is an incouragement of basic points or a discount, which is a decline, can occur.
For example, imagine that the current cooker in the store between USD and EUR is $ 0.7532/EUR. This means that $ 1 is currently EUR 0.7532. One -year handover rate for a couple is $ 0.7632/EUR. In the one -year forward trade, the pair would be 100, which is 0.7632 minus 0.7532, while the decimal part would then be removed to clarify the amount. It would be an example of forward premium because the basic points increased in the store.