Investment Language 101 Series: TERM OF THE DAY: -- What Is: ' Inverse Transaction ' | E.38 | Trading Candle Cheat Sheet Incl. Each Episode.
A series designed to help all the new people flooding into & entering Crypto/Investments daily who get thrown into the rabbit hole so to speak and everything is new to them.
It is a TLDR / Short Form Series, covering ONLY one thing each episode in blue collar, easy to understand language to give a SHORT OVERVIEW of the term or lesson of the day.
It is specifically designed this way to keep it short and simple.
People can then search out extra info if they wish.
I've never seen a regular series or resource running on Steemit to continually address this basic need so I decided to do it.
TERM OF THE DAY:
What is....
' Inverse Transaction ' ?
--
A transaction that can cancel out a forward contract that has the same value date. Inverse transactions are used with options and forwards, leaving the investor with a fixed gain or loss when the transaction is closed. An inverse transaction is considered the transaction that “undoes” or closes out a previous transaction made by an investor.
--
Breaking Down...
' Inverse Transaction ' :
--
Investors purchasing forwards can choose to take possession of the underlying asset, such as currency, at the time of expiration or can close the contract out before the expiration date is reached. To close out the position, the investor must buy or sell an offsetting transaction. An inverse transaction can be made through a clearing house, which matches the transaction details from the investor with the transaction details of an outside buyer or seller.
For example, a U.S. company purchases €100,000 at $1.14 per euro in March. When it closes the position, it uses an inverse transaction by selling €100,000 with the same date as the forward it purchased in March. The company’s locked in profit will be the amount of money received for selling the euro less the amount paid for the purchase of the euros with the forward contract.
If the inverse transaction is completed with a bank that is different from the bank that the investor purchased the forward contract through, using an inverse transaction will make the transaction fully covered with a profit or a loss. The transaction will not be closed out because there will be two offsetting forwards purchased through two different banks.
While an investor may realize a profit after closing out a position through an inverse transaction, it is also possible that the investor will realize a loss. Depending on the amount of the loss, the investor may face a margin call if the transactions were made from borrowed funds.
Trading Candle Cheat Sheet:
--
Further Reading/Source/Resources
Friend of the People -- Enemy of the State.
--
I am leaving these images I made here until I figure out one that fits properly and looks right for the first/main image for the post/series.
--
Since Steemit dev's changed the size of the picture frame that shows, it has honestly been a real problem getting images to match the screen, it was perfectly fine months ago before they messed around with it.
SMH.
Thanks for reading, have a nice day.
PixaBay has tons of free pictures for us all to use!!!
Super Easy/Fast Picture Edits / Resizing at: http://www.picresize.com/ and also https://www298.lunapic.com/editor/
If you liked this blog post - please Resteem it and share good content with others!
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Some of my recent blogs:
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Most Images: Gif's - via Giphy.com , Funny or Die.com / Pixabay. Today:
If you feel my posts are undervalued or you want to donate to tip me - I would appreciate it very much.
--
LiteCoin (LTC) - LKdsnvSXk9JW99EiNicFMGKc1FXiBo9tUE
Monero (XMR) - d8ecb02c09f70ec10504b59b96bc1f488af28b05933893dfd1f55b113e23fbff
EOS (EOS) - 0xD37bEFf5bf07E3aa432de00cE0AaA8df603A4fB0
Ethereum (ETH) - 0x3Ad69Ff057C9533ca667B2d7E3E557F5eeFd4477
Ethereum Classic (ETC) - 0x5ab2b08d4ce8d454eb9d1ecc65c6d8b0c5f9784c
Bitcoin (BTC) - 18J6RRuzX4V7b2CDbx7tWZYNBLkkGWsvWX
DASH - XgZvsvSZgPkNbmGbRhc3S1Pt2JAc7QHwiS
PIVX - DA3azxQqJiX9t7EviuacpamfNhMi2zGAUh
Stratis (STRAT) - SNsJp6v1jXvKWy4XcXSXfNQ9zhSJJppJgv
ZCash (ZEC) - t1aCPEYELkGaf3GtgGTiCEDo7XfPm4QEwmL
Please note -- I will have limited internet access for awhile -- so PLEASE do not be upset that I cannot reply right away, or to everyone. I am dealing with some changes, and will have limited time online and will be happy if I get a few blog posts up a week.
This has really upset some people but I do not force my opinions on others, or need to communicate every detail of my life or issues, most people do not care anyways. I invested around 10 hours or more a day on Steemit most of my first 13 mths here, trying to build community, put out content and engage people, help and donate to people, and I just do not have that time in my life right now, and that includes for replies and voting/curation.
I have done my best, sorry if you do not understand like some are clearly having a problem with. It's a blogging platform, and I will do my best at everything, and to keep blogging.
Carry On.
A series designed to help all the new people flooding into & entering Crypto/Investments daily who get thrown into the rabbit hole so to speak and everything is new to them.
It is a TLDR / Short Form Series, covering ONLY one thing each episode in blue collar, easy to understand language to give a SHORT OVERVIEW of the term or lesson of the day.
It is specifically designed this way to keep it short and simple.
People can then search out extra info if they wish.
I've never seen a regular series or resource running on Steemit to continually address this basic need so I decided to do it.
TERM OF THE DAY:
What is....
' Inverse Transaction ' ?
--
A transaction that can cancel out a forward contract that has the same value date. Inverse transactions are used with options and forwards, leaving the investor with a fixed gain or loss when the transaction is closed. An inverse transaction is considered the transaction that “undoes” or closes out a previous transaction made by an investor.
--
Breaking Down...
' Inverse Transaction ' :
--
Investors purchasing forwards can choose to take possession of the underlying asset, such as currency, at the time of expiration or can close the contract out before the expiration date is reached. To close out the position, the investor must buy or sell an offsetting transaction. An inverse transaction can be made through a clearing house, which matches the transaction details from the investor with the transaction details of an outside buyer or seller.
For example, a U.S. company purchases €100,000 at $1.14 per euro in March. When it closes the position, it uses an inverse transaction by selling €100,000 with the same date as the forward it purchased in March. The company’s locked in profit will be the amount of money received for selling the euro less the amount paid for the purchase of the euros with the forward contract.
If the inverse transaction is completed with a bank that is different from the bank that the investor purchased the forward contract through, using an inverse transaction will make the transaction fully covered with a profit or a loss. The transaction will not be closed out because there will be two offsetting forwards purchased through two different banks.
While an investor may realize a profit after closing out a position through an inverse transaction, it is also possible that the investor will realize a loss. Depending on the amount of the loss, the investor may face a margin call if the transactions were made from borrowed funds.
Trading Candle Cheat Sheet:
--
Further Reading/Source/Resources
Friend of the People -- Enemy of the State.
--
I am leaving these images I made here until I figure out one that fits properly and looks right for the first/main image for the post/series.
--
Since Steemit dev's changed the size of the picture frame that shows, it has honestly been a real problem getting images to match the screen, it was perfectly fine months ago before they messed around with it.
SMH.
Thanks for reading, have a nice day.
PixaBay has tons of free pictures for us all to use!!!
Super Easy/Fast Picture Edits / Resizing at: http://www.picresize.com/ and also https://www298.lunapic.com/editor/
If you liked this blog post - please Resteem it and share good content with others!
--
Some of my recent blogs:
--
Most Images: Gif's - via Giphy.com , Funny or Die.com / Pixabay. Today:
If you feel my posts are undervalued or you want to donate to tip me - I would appreciate it very much.
--
LiteCoin (LTC) - LKdsnvSXk9JW99EiNicFMGKc1FXiBo9tUE
Monero (XMR) - d8ecb02c09f70ec10504b59b96bc1f488af28b05933893dfd1f55b113e23fbff
EOS (EOS) - 0xD37bEFf5bf07E3aa432de00cE0AaA8df603A4fB0
Ethereum (ETH) - 0x3Ad69Ff057C9533ca667B2d7E3E557F5eeFd4477
Ethereum Classic (ETC) - 0x5ab2b08d4ce8d454eb9d1ecc65c6d8b0c5f9784c
Bitcoin (BTC) - 18J6RRuzX4V7b2CDbx7tWZYNBLkkGWsvWX
DASH - XgZvsvSZgPkNbmGbRhc3S1Pt2JAc7QHwiS
PIVX - DA3azxQqJiX9t7EviuacpamfNhMi2zGAUh
Stratis (STRAT) - SNsJp6v1jXvKWy4XcXSXfNQ9zhSJJppJgv
ZCash (ZEC) - t1aCPEYELkGaf3GtgGTiCEDo7XfPm4QEwmL
Please note -- I will have limited internet access for awhile -- so PLEASE do not be upset that I cannot reply right away, or to everyone. I am dealing with some changes, and will have limited time online and will be happy if I get a few blog posts up a week.
This has really upset some people but I do not force my opinions on others, or need to communicate every detail of my life or issues, most people do not care anyways. I invested around 10 hours or more a day on Steemit most of my first 13 mths here, trying to build community, put out content and engage people, help and donate to people, and I just do not have that time in my life right now, and that includes for replies and voting/curation.
I have done my best, sorry if you do not understand like some are clearly having a problem with. It's a blogging platform, and I will do my best at everything, and to keep blogging.
Carry On.
--
LiteCoin (LTC) - LKdsnvSXk9JW99EiNicFMGKc1FXiBo9tUE
Monero (XMR) - d8ecb02c09f70ec10504b59b96bc1f488af28b05933893dfd1f55b113e23fbff
EOS (EOS) - 0xD37bEFf5bf07E3aa432de00cE0AaA8df603A4fB0
Ethereum (ETH) - 0x3Ad69Ff057C9533ca667B2d7E3E557F5eeFd4477
Ethereum Classic (ETC) - 0x5ab2b08d4ce8d454eb9d1ecc65c6d8b0c5f9784c
Bitcoin (BTC) - 18J6RRuzX4V7b2CDbx7tWZYNBLkkGWsvWX
DASH - XgZvsvSZgPkNbmGbRhc3S1Pt2JAc7QHwiS
PIVX - DA3azxQqJiX9t7EviuacpamfNhMi2zGAUh
Stratis (STRAT) - SNsJp6v1jXvKWy4XcXSXfNQ9zhSJJppJgv
ZCash (ZEC) - t1aCPEYELkGaf3GtgGTiCEDo7XfPm4QEwmL
Please note -- I will have limited internet access for awhile -- so PLEASE do not be upset that I cannot reply right away, or to everyone. I am dealing with some changes, and will have limited time online and will be happy if I get a few blog posts up a week.
This has really upset some people but I do not force my opinions on others, or need to communicate every detail of my life or issues, most people do not care anyways. I invested around 10 hours or more a day on Steemit most of my first 13 mths here, trying to build community, put out content and engage people, help and donate to people, and I just do not have that time in my life right now, and that includes for replies and voting/curation.
I have done my best, sorry if you do not understand like some are clearly having a problem with. It's a blogging platform, and I will do my best at everything, and to keep blogging.
Carry On.
This is a great series, @barrydutton, as there are so many new to investing.
Thanks for your foresight in sharing.
a very important piece of material for reading. I recommend!
Awesome!