As the largest and most liquid market in the world, the Foreign Exchange (FX) market is also the most accessible. Trading 24-hours a day means you can trade the opportunity as you see it. Whether you're after short-term volatility or long-term price trend, you can trade FX based on international news or economic fundamentals.
Recent global developments such as interest rate movements, concerns about inflation, and rising commodity prices translate to an active FX market, which has grown more than 20% in three years.
City Index has recently reduced spreads on over 50 rolling currency pairs, and now offers some of the tightest in the market. Our most popular markets are GBP/USD, EUR/USD and USD/JPY, with our daily rolling spreads for EUR/USD at just 1 pip and GBP/USD at 2 pips, commission free.
Currencies CFD Trading Example
Let's say our current GBP/USD CFD price is 1.5020 bid/1.5023 ask (sell price/buy price).
Going Long
You expect sterling to strengthen against the US dollar and decide to buy (go long) 2 CFDs 1.5023.
You were right: As you anticipated, sterling strengthens against the dollar, and when it reaches 1.5210 you decide to cash in your profits. Our new underlying market spread is 1.5210/1.5213 and you sell 2 CFDs at 1.5210.
Result: You bought at 1.5023 and sold at 1.5210, a rise of 187 pips, which at 2 CFDs nets you a profit of $374 (1.5210 – 1.5023 x 2 CFDs).
Alternative scenario: If however, sterling had weakened against the US dollar to 1.4836, you would have netted a $374 loss (1.5023 - 1.4836 x 2 CFDs).
Going Short
You expect sterling to weaken against the US dollar and decide to sell (go short) 2 CFDs at 1.5020.
You were right: As you anticipated, sterling weakens against the dollar, and when it reaches 1.4860 you decide to cash in your profits. Our new underlying market spread is 1.4857/1.4860 and you buy 2 CFDs at 1.4860.
Result: You sold at 1.5020 and bought back at 1.4860, a fall of 160 pips, which at 2 CFDs nets you a profit of $320 (1.5020 – 1.4860 x 2 CFDs).
Alternative scenario: If however, sterling had strengthened against the US dollar to 1.5180, you would have netted a $320 loss (1.5180 - 1.5020 x 2 CFDs).
For the purpose of simplicity, commissions, financing charges and payments have been omitted from these examples. Find out more about our financing charges.
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