Forex examples
Trade forex commission-free. You can open a new position from just 0.5%* of the contract value.
Depending on conditions in the underlying market, our forex trading spreads can be as low as 0.8 pips on FX pairs such as AUD/USD, EUR/USD and USD/JPY, and from just 1 pip on GBP/USD and EUR/GBP. All our contract sizes are set out in the contract details.
'Sell'
'Selling' EUR/USD
Opening the position
You decide to open a short trade on the euro against the US dollar. In September 2011 our quote is 1.38661/1.38669, and you sell 5 contracts (the equivalent of €500,000) at 1.38661.
The value of your position is €500,000 x 1.38661 = US$693,305. To open the position you supply a deposit of just 0.5% of the position. Your deposit is therefore 0.5% x US$693,305 = US$3,466.53. There is no commission to pay on FX trades.
Interest adjustments
While the position remains open, your account is debited or credited to the current Tom-Next rate. Tom/Next expresses in pips the difference between the interest paid to borrow the currency that is being notionally sold overnight, and the interest received from holding the currency that is being notionally bought overnight.
An administrative charge of 0.8% p.a. for mini FX contracts and 0.3% p.a. for standard FX contracts applies on either side of the current Tom/Next spread.
Closing the position
One week later, EUR/USD has fallen to 1.37113/1.37121, and you take your profit by buying 5 contracts at 1.37121. Your gross profit on the trade is calculated as follows:
| Profit on trade | |
|---|---|
| Opening transaction | €500,000 (5 contracts) x 1.38661 = US$693,305 |
| Closing transaction | €500,000 (5 contracts) x 1.37121 = US$685,605 |
| Gross profit on trade: US$7,700 | |
To calculate the net result you also have to include interest adjustments. For more information see contract details.
Of course, had the market moved in the opposite direction, you would have made a loss that may have exceeded your initial deposit.
'Buy'
'Buying' AUD/USD
Opening the fx position
You decide to trade long on the Australian dollar against the US dollar. Our quote in December 2011 is 1.01041/1.01049, and you buy 5 contracts (the equivalent of A$500,000) at 1.01049.
The value of your forex position is A$500,000 x 1.01049 = US$505,245. To open the position you supply a deposit of just 0.5% of the position. Your deposit is therefore 0.5% x US$505,245 = US$2,526.23. There is no commission to pay on forex trades.
Interest adjustments
While the position remains open, your account is debited or credited to the current Tom-Next rate. Tom/Next expresses in pips the difference between the interest paid to borrow the currency that is being notionally sold overnight, and the interest received from holding the currency that is being notionally bought overnight.
An administrative charge of 0.8% p.a. for mini FX contracts and 0.3% p.a. for standard FX contracts applies on either side of the current Tom/Next spread.
Closing the position
Two days later, AUD/USD has fallen to 0.99728/0.99836, and you decide to cut your losses and close the trade by selling 5 contracts at 0.99728. Your loss on the trade is calculated as follows:
| Loss on trade | ||
|---|---|---|
| Opening transaction | A$500,000 (5 contracts) x 1.01049 = US$505,245 | |
| Closing transaction | A$500,000 (5 contracts) x 0.99728 = US$498,640 | |
| Gross loss on trade: US$6,605 | ||
To calculate the net result you also have to include interest adjustments. For more information see contract details.
Please consider our PDS. Your losses can exceed your initial deposit and you do not own or have any interest in the underlying asset.