When you enter the forex market you hope to make a profit. How you make that profit is based on your understanding of the market, your knowledge, and the currency pairs you trade. All of the previous statements are considered trading strategies. To a degree you can use forex charts to determine what might occur, but remember that past price action does not mean everything is going to act the same in the future. You might have a trend that repeated five times, but now it is going to disappear as a trend for five years. Be wary of what you follow when looking at charts alone.
Forex Charts for DKK/JPY Favour JPY
It is hard to understand how 15.00 exchange rate for the DKK/JPY actually favours the JPY until you understand a little about JPY exchange rates. JPY uses a two decimal place system versus the four decimal place system found with other currency pairs. The DKK/SGD is even based on a four decimal system in which the rate will be 5.0000 instead of 50.00. Even though the JPY might look like 15 yen to 1 DKK in actuality your profit is the same if you looked at a pairing in which the rate was 1.5000. When you shop in Japan prices are labelled in 100.00 meaning you need 100.00 Yen for even the smallest purchase and often a lot more than just 100.00 Yen. Forex charts fail to help you understand these finer details, so you can easily get confused on what is happening for the future of a currency pair.
As you study more and more forex charts you will notice that previous price action is very clear; however, the most current reaction is something you need to assess based on probability and expected reaction from economic news and market sentiment. If you can remember these points you will find it easier to examine charts and see potential profits.
Forex Charts DKK/JPY Profit Calculation Examples
The DKK/JPY relationship is small in terms of trade. Japan is a major exporter to many countries providing their electronics throughout the world. Sony is certainly one company found in most countries. This relationship can determine how forex rates will change in forex charts and thus how you can calculate profits.
Profits are fairly simple for a calculation. You take the lot size times the open rate. You also take the lot size times the closing rate. You minus the open from the close and thus get the profit. If the rate was 15.00 and it went to 18.00 the DKK was favoured and it was a 3.00 move. If you have a lot size of 1,000 what would be the profit? You see 15,000 to start and a move to 18,000 for the end, giving you 3000 JPY profit. To convert to DKK you would need to divide 3,000 by the current rate shown in forex charts which was 18.00. In DKK this is 166.67. As you can see in JPY it looks like a lot of profit, but in DKK it is relatively small.