Spreads from just 0.6 pips and guaranteed stops available1 for trading in volatile markets with the world's No.1 CFD and Australia's No.1 retail FX provider.2
The world's and Australia's No.1 CFD provider, and Australia's No.1 retail forex provider2
Spreads from 0.6 pips on EUR/USD and AUD/USD
Without having to buy and store actual bitcoins
Full market transparency with Forex Direct (DMA)
Essential and pro charts on desktop and apps
|IG spreads||Forex Direct (DMA)||
|Min. spread||Av. spread3||Av. spread4|
How does it work?
Forex prices are always quoted in currency pairs. This is because you are effectively buying one currency while selling the other. Each currency in the pair is known by a three letter currency code, such as AUD/USD.
The first currency listed in a pair is known as the base currency and the second currency is known as the quote currency. A forex price indicates how much one unit of the base currency will buy of the counter currency.
Why trade forex?
Forex trading enables you to speculate on the relative strength of one currency against another. The large number of traders and immense quantity of currency traded on a daily basis give the forex market exceptionally high liquidity. This means it’s a very easy market for anyone to access – you can normally buy a currency on demand, because another trader somewhere will be willing to sell, or vice versa.
In trading forex you generally only need a small margin to get started, there are low transaction costs, and you can take advantage of high levels of leverage. It should always be kept in mind that leverage not only magnifies your potential profits but also your potential losses. It is possible to lose much more than your initial margin if the market turns sharply against you.
Going long or short?
Depending on your view, you can either buy (‘go long’) or sell (‘go short’) in the forex markets.
Let’s say you have been keeping an eye on the euro and you think it will increase in value. In this situation, you would go long EUR/USD. In other words, you would buy euros and simultaneously sell dollars.
If you thought the euro was destined to decrease in value, you would go short EUR/USD. That would mean selling euros and buying dollars.
Spot FX AUD/USD
0.76912 / 0.76920
Buy at 0.76920 (7,692.0 points)
1 standard contract
Equals US$10 per point
Margin = Number of contracts x value of one contract x current level (mid price) x margin rate (0.5%)
1 x US$10 x 7,691.6 x 0.5% = US$384.58
|What happens next?||
AUD/USD climbs 150 points into the next day. This position is held through 10pm London time, when funding is calculated.
Funding = size x (tom-next rate + IG's charge for holding positions overnight which is no more than 0.0022% per day)
US$10 x -0.96 = -US$9.60 (so you would actually receive US$9.60 in this instance)
0.78412 / 0.78420
Sell at 0.78412 (7,841.2 points)
7,841.2 - 7,692.0 = 149.2 points
Each contract is worth US$10 per point (so US$10 x 149.2 points)
Gross profit = US$1,492
0.8 point IG spread (included above)
Funding adjustment = US$9.60 (a credit to your account)
What if the market dropped 150 points instead (with a spread of 0.8 points):
US$1,508 - US$9.60
Net loss = US$1,498.40
1 Guaranteed stops are not available on all markets and the size of the positions on which we are able to offer this facility may be limited. Please contact our Helpdesk for details.
2 World's largest retail CFD provider by revenue (excluding FX). Source: Published financial statements, as at February 2018. Number 1 in Australia by primary relationships, Investment Trends December 2017 FX Report. Investment Trends August 2017 CFD Report.
4 Average spread (Monday 00:00 - Friday 22:00 GMT) for the 12 weeks ending 19th March 2019. There is also a commission charge for Forex Direct.
5 Percentage of attached and unattached orders filled at the requested level, December 2015.