Honestly, if you don't understand that, you shouldn't be playing forwards yet.
Honestly, if you don't understand that, you shouldn't be playing forwards yet.
Not uncommon, many traders underestimate how the carry trade influences forwards.
The key is the opportunity cost between the two currencies. That difference is reflected in the initial forward P/L.
If you're running forwards without understanding swap points and spreads, it's going to cost you more than you earn.
Not bad about your approach, but you need to go deeper into forward assessment. Without that, you don’t understand what you’re seeing.
That's the essence of the forward. Don't get confused anymore.
Make an Excel sheet and calculate it on your own. So you will understand each component of the price.
That's not a mistake, it's the exact reflection of the financial cost of keeping the position open to maturity.
It's likely that the broker is putting margin into the forward price, so they generate profit.
You're comparing pears with apples. The spot is instantaneous, the forward has time horizon and rate. That's why the P/L is not the same.
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