Earning The Points
Definition of 'Earning The Points'A currency trading term that describes when the forward ask price is lower than the spot bid price, resulting in a gain for the trader. A trader is gaining the points when he or she sells at one price now then agrees to buy for less in the future. Gaining the point only refers to the difference between sell and buy prices and does not take the time value of money into account.This is the opposite of "losing the points". |
|
Investopedia explains 'Earning The Points'If the individual sells at the higher ask price in the spot market, then buys at a lower bid price in the futures market, he or she is gaining the points.For example, suppose that Peter sells the British pound at 2.2055 dollars per British pound in the spot and enters into a forward contract to buy the pound back at 2.2000 dollars per pound in the future. Peter is gaining the points, in this case 0.0055 dollars per pound. |
Related Definitions
Articles Of Interest
-
Playing The Gap
Learn how you can earn money by analyzing the disruptions in normal price patterns. -
How To Place Orders With A Forex Broker
Learn how to set each type of stop and limit when trading currencies. -
Getting Started In Forex
Before entering this market, you should define what you need from your broker and from your strategy. -
The Fundamentals Of Forex Fundamentals
Charting is not the only way to analyze the foreign-exchange market. Learn how to apply fundamental analysis to the economic indicators. -
Forex Tutorial: The Forex Market
In this online tutorial, beginners and experts alike can learn the ins and outs of the retail forex market. -
Uncovering Oil And Gas Futures
Find out how to stay on top of data reports that could cause volatility in oil and gas markets. -
Trading Is Timing
Learn how to make gains even if you don't get in at the right time. -
Leading Economic Indicators Predict Market Trends
Leading indicators help investors to predict and react to where the market is headed. -
Exploring Non-Dollar Currencies For Forex Trading
Learn how investments in foreign currencies can diversify your portfolio. -
Candlestick Charting: What Is It?
Discover the components and basic patterns of this ancient technical analysis technique.
Free Annual Reports