Invested Capital Formula in Forex Trading: An Academic Overview
The Invested Capital formula is a fundamental concept in Forex trading. This formula is used to calculate the amount of money that is being invested in a currency pair. It takes into account the current exchange rate, as well as the size of the position that is opened. It is important when trading in the Forex market because it can be used to determine the amount of risk that is associated with each position. The formula for Invested Capital is used by traders to evaluate the risk versus reward of their trading position, and to make informed decisions when entering and closing trades. Additionally, it can be used to determine whether a position is profitable or not. By calculating Invested Capital, Forex traders can have a better understanding of their risk and reward when entering and closing trades.