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.
We offer some of the tightest spreads in the market on over 40 currency pairs, including AUD/USD, EUR/USD and USD/JPY, with our spread for AUD/USD fixed at 1.4 pips during our fixed spreads hours of 6pm until 4.30am. Outside of our fixed spread hours, our currency pairs operate with Capped Variable Spreads including EUR/USD from 0.8 pips.
Let's say our current GBP/USD CFD price is 1.5020 bid/1.5023 ask (sell price/buy price).
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).
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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City Index is a trading name of GAIN Capital Australia Pty Ltd.
The material provided herein is general in nature and does not take into account your objectives, financial situation or needs. While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments. GAIN Capital recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets. It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com.au, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. GAIN Capital Australia Pty Ltd (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.