Discounted Cash Flows in Forex Trading: Learn the Basics

Estimated read time 6 min read

Discounted cash flows in Forex trading involve the use of various financial instruments to calculate outflows and inflows of funds over a designated period of time. By discounting the future cash flows, investors are able to understand the true value of a given currency or instrument and, in turn, receive a more accurate value of the overall investment. This helps investors to learn when is the best time to buy or sell the currency or instrument. Discounted cash flows are also frequently used as part of currency hedging strategies as they help to mitigate potential losses.