Saturday, July 20, 2024

Notional Amount

In Forex trading, the notional amount, also known as the notional principal or notional value, is the amount of currency to be sold and purchased.

It is important to remember that in Forex there are always two concepts because currency exchange always involves two currencies.

One party to a currency transaction is always bound by two underlying notional amounts, the currency being bought and the currency being sold.

For example, a company might choose to purchase €1,000, which would cost $1,100. Therefore, the nominal amount in the United States is 1,310 dollars and 1,000 in euros.

Notional amounts are also often used in the options and futures markets, which are the total value of assets in a leveraged position.

If you want to learn more foreign exchange trading knowledge, please click: Trading Education.

Read more

Local News