Forex is the most traded and liquid market in the world. Foreign exchange is the simultaneous buying of one currency and the selling of another.
Currencies are traded in pairs, for example the Euro and the US dollar (EUR/USD) or the British pound and the Japanese Yen (GBP/JPY). The dealing rate has 2 quotes, the buy price and the sell price, the difference between this is called the spread. You will be dealing with the first mentioned currency within your pair when you spread betting on Forex.
Forex Products Offered
- AUDCAD
- AUDJPY
- AUDNZD
- AUDUSD
- CADCHF
- CADJPY
- CHFDKK
- CHFJPY
- CHFUSD
- EURAUD
- EURCAD
- EURCHF
- EURGBP
- EURHUF
- EURJPY
- EURNOK
- EURNZD
- EURSEK
- EURUSD
- GBPAUD
- GBPCAD
- GBPCHF
- GBPDKK
- GBPEUR
- GBPJPY
- GBPNOK
- GBPNZD
- GBPSEK
- GBPUSD
- GBPZAR
- NZDJPY
- NZDUSD
- SGDJPY
- USDCAD
- USDCHF
- USDDKK
- USDJPY
- USDNOK
- USDSEK
- USDSGD
Trading Example
You think that the US Dollar will appreciate against the Japanese Yen and place a spread bet on the USD/JPY currency pair
The quote for USD/JPY (US Dollar vs Japanese Yen) is 1.5471 / 1.5472 and you decide to buy £10 per point at 1.5472. Having bought US Dollars you have immediately sold Japanese Yen. For every point that USD/JPY goes above 1.5472 you will make £10 and for every point that USD/JPY moves below 1.5473 you will lose £10.
Profit and Loss Calculation
The US Dollar has appreciated against the Japanese Yen and is now being quoted 1.5555 / 1.5556 and you decide to exit your initial Buy position (1.5472) by selling £10 per point at 1.5555.
You have made £820 (1.5555 -1.5472 = 83 x £10 per point = £830).