* Risk Warning: Trading in forex and CFDs could lead to a loss of your invested capital.
Spreads
A spread is the difference between the sell price and buy price. Trade Markets offers variable spreads on our Web Trader, Forex trading platform. Our typical spreads are shown below. Spreads can go as low as 0.1 pips (1 point) on our Web Trader platform. Instrument Specifications are subject to change. The most accurate details are those displayed in your account through the electronic trading system. Instrument Specifications are subject to change. The most accurate details are those displayed in your account through the Web Trader Platform under Instrument Information.
Key Information about Spreads
Spreads at Trade Markets are variable on the different types of Accounts.
The Premium Account offers spreads as low as 0.1 pips.
Trader and Trader Premium accounts offer spreads starting from 0.3 pips.
DOWNLOAD .PDF
Trade Cost Calculation
To calculate the cost of a trade (excluding swaps and commissions) multiply the spread and pip value by the number of lots traded:
Trade Cost =
Spread x Trade Size x Pip Value
Assuming you’re trading 1 standard lot of EURUSD which is 100,000 base units. You open a trade that has 0.3 pips (or 3 points) spread. The pip value for EURUSD for 1 standard lot traded (100 000 units) is $10*, so the transaction cost will be 0.3*1*10= $3
Pip Value Calculation:
If your account currency and the quote currency (the second currency of the pair you trade) are the same, the monetary value of a pip is fixed at 0.0001 quote currency.
Example:
If the USD is your account currency, in pairs ending in USD (such as EURUSD, AUDUSD, NZDUSD, etc.) one pip is worth $0.0001 0.0001 multiplied by contract size (100 000 units = Standard lot) is equal to $10 pip value. If you trade 0.01 lots then pip value will be 0.0001*100 000* 0.01 = $0.1
Commissions
Trade Markets applies commissions on all CFDs and the rates vary by trading account type.
T Markets_Costs and Charges_v1.pdf (trademarkets.eu)
Calculation of Commission:
Example commission is 2.5 €/$ (depending on account currency) per lot and you are trading 0.1 lots, then the commission will be 2.5*0.1= 0.25 €/$ round turn.
The commission will be charged at the open side of the trade.
Swaps
A Forex swap rate or rollover is defined as the overnight interest added or deducted for holding a position open overnight. Swap rates are determined by the overnight interest rate differential between the two currencies involved in the pair and whether the position is long or short.
Swaps are only applied when a trade is kept open overnight through to the beginning of the next trading day. Certain symbols can have negative swap rates for both buy (long) and sell (short) positions. Swap rates are either calculated in points or in percentage terms, and our trading platform automatically converts them into the account base currency. Swap rates can differ between symbols and the rates shown are per standard lot. Our symbols have triple swap charges on Wednesdays. See details for relevant financial instrument on our WebTrader under instrument information.
How to calculate
the cost of swaps
Example:
Trading 1 lot (1,000 units/barrels) for 1 day of Crude Oil (instrument currency USD) with an account denominated in EUR, swap type equal to USD and swap charges for long and short equal to -3.71 the charge will apply as below:
Swap = (Swap Rate in Currency mentioned in Swap Type) * Quantity * Number of Nights)/EURUSD
Swap = -3.71 * 1 * 1 = -3.71 USD
Given EURUSD rate at 1.10013 it means a EUR denominated account will be charged -3.37 EUR.
Commission Charges:
You will be charged $6 per lot.
So, the commission charged for this trade = 2lots x $6
Total commission charges = -$12
How to calculate the
profit/loss of your trade
Example:
You have deposited 10,000 USD on your Trader Premium account and sold 2 lots of EURUSD. Your position is kept open for 3 days.
Account Type: Trader Premium
Platform: Webtrader
Account Base Currency: USD
Trade Size: sell 2 lots
Leverage: 1:30
Position open for: 3 days
Swap Rate Long in points: -7.64
Swap Rate Short in points: 2.08
Spread (pips): 0.3 pips (3 points)
Commission (USD): 6 per lot round turn
Spread: The pip value of 1 lot is at $10, so for 2 lots, the pip value will be $20. In this case, if the spread is 0.3 pips, your spread cost will be: 0.3 pip x $20 = $6 In case the EURUSD drops by 10 pips, the gross profit will be 10 pips x $20 per pip = $200
Swap Charges:
Swap Long:
Current Swap points for going long on EURUSD on our Webtrader is -7.92 EUR.
The swap charge will be equal to 2 lots x (-7.92) x 3 nights = -47.52 EUR
Swap Short:
Current Swap points for going short on EURUSD is 2.36 points.
The applied swap will be equal to 2 lots x (+2.36) x 3 nights = +14.16 EUR
So, the total trading costs in the above example, given a EURUSD rate of 1.10013 for both cases
(long and short position) is shown below:
Margin required to open 2 lots of EURUSD on 10 000 USD Account with leverage 1:30 will be as follows:
Leverage 1:30 = 100/30 = 3.33%
2lots * EURUSD price* Contract Size* 3.33%
2lots *1.1100*100 000*3.33%= 7,392.6 USD
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