Categories: Formula

Simple Interest Formula in Forex Trading: A Useful Guide

planations

Simple interest is a type of interest calculated on the principal amount of a loan or an investment. It is calculated as the product of the principal amount, interest rate, and the time period. Unlike compound interest, simple interest does not compound itself and only accumulates on the initial principal amount. The formula for simple interest is: SI = (P x R x T)/100. P stands for Principal amount, R stands for Rate of Interest per annum, and T stands for the Time period of the loan or investment.

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Categories: Formula

Sharpe Ratio Formula: Calculate Market Returns with Accuracy

The Sharp Ratio is a powerful tool for Forex traders, as it can help you determine how profitable your portfolio is. The formula for the Sharp Ratio is simple: it is calculated by subtracting the risk-free rate from the average rate of return of a security or portfolio over a given period of time, and then dividing the result by the standard deviation of the investment’s returns over the same time period. By understanding the Sharp Ratio, Forex traders can use the data to make more informed decisions about their investments.

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Categories: Capital

Return on Capital” in Forex Trading: Understanding ROI

Return on capital in the Forex market is the amount of gain or loss on a trade relative to the capital invested. This return is determined by analyzing the difference between entry and exit prices and taking into account any fees associated with the trade. Successful Forex traders aim to maximize return on capital while minimizing risk. To do this, they apply a wide range of strategies to assess market conditions, develop a trading plan, and execute trades at favorable entry and exit prices. Over the longer term, success in the Forex market is about capital preservation and achieving positive returns.

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