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I have started a job in an investment management company and their business is to invest in financial markets.
How this all works is they will open an online account eg with a forex broker and deposit $ 100 into it. The broker will allow them to make trades worth $ 20,000 .
On system they can buy and sell any currency (even $) worth $ 20,000 and can make profit.
Holding period of transaction can be for 1 hour or multiple days.
As they just benefiting from market movements , i dont belive these transactions fall under Forward or Future contracts.
Same is the trading scenario for Bonds.
Kindly please advise me how to account it ?Hi,
I think it would fall under financial instruments and a derivative. It appears that there is a contract between yourselves and the broker that will be settled in the future. The amount settled will be dependent on the forex rates and how they move. The amount paid is the initial deposit.
Hope this helps.
Thanks
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