So this guy, Robin, believes that Euro will trade higher against the US dollar. He's facing the current bid ask quote on the screen of these prices here and one contract is a hundred thousand units. What is a possible trade? Well, the trade of course, would be to buy the Euro and sell the dollar. He believes the Euro will trade higher, so we'll buy the Euro and therefore sell the dollar. How many units of Euro would he have to buy? Well, one contract is a hundred thousand units, so that would be the smallest amount he could buy. So he has to buy a hundred thousand Euros.

And then to the big question, what would be the exchange rate for Robin in this trade? Well, clearly he would have to pay the market's asking prices. So we would have to pay the higher of these two quoted prices. So we'd have to pay 1.3357. And we know how many Euros he's buying. We know the exchange rate. So the cost of the trade in US dollars would be one times the other. So the cost of this trade would be $133,570. So he now has this position of Euros.

The next day US unemployment rate is announced. It's higher than expected. The Euro appreciates against the US dollar, so it gets more valuable compared to the US dollar. The bid ask on Euro US dollar is now this number here. What is Robin's profit or loss? Well, let's figure it out. First of all, he still has a hundred thousand Euros. So in your terms, his position of course is flat, but the exchange rate has moved. What if he was to sell the Euros now, what price would he receive? Well, he would receive the market's bid price, of course, where the market will buy. And that quote is now 1.3430.

And therefore Robin's position in US dollars is worth the number of Euros times the exchange rate there. The bid side, his position is worth 134,300. So let's compare that to what he paid. Well, he has a 134,300 and he paid a 133,570. So he, he's made a profit there of 730 US dollars.