AN EXAMPLE OF A CURRENCY TRADE
Crossing GBP / USD is at 1.6275 / 1.6278 and you decide to buy 1 contract at 1.6278. A contract is 100,000 pounds or what is the same, the current exchange rate would be $ 162,780.
This means that each "pip" or fourth decimal in this case has a value of $ 10 ( in other words, a " pip" is $ 0.001 per pound and your position is £ 100,000. This means that a beep is $ 0.0001 / £ x £ 100,000 = $ 10 ).
No additional commission is paid on these transactions, because the entire commission for CFDs on forex brokers is included in the spread. While your position remains open, your account will be reflected daily variation overnight interest rate between the pound and the dollar.
Two days later the price of GBP / USD is 1.6385 / 1.6387 and you decide to take profits. At 1.6385 you close your position.
Your benefit is calculated as follows:
Closing level: 1.6385
Opening level: 1.6278
Difference: 107 "pips"
Your contract of £ 100,000 represents $ 10 for each 'pip', equivalent to a profit of 107 x $ 10 = $ 1,070.
(To calculate the total profit you should take into account the daily interest adjustments).
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