Spread and overnight interest

Use the world famous MT4 platform to trade gold and silver.

What is foreign exchange spread?

When you start trading, you will find that you get a "bid" price (selling price) and an "ask" price (buying price). "Bid" refers to the price of selling the base currency, "ask" refers to the price of buying the base currency. The difference between the two prices is what we call the spread.

When starting a transaction, there is always a third party facilitating the start and end of the transaction (such as a bank or liquidity provider). These third parties must ensure the orderly flow of purchase and sale orders, which means that they must find a buyer for each seller and vice versa.

The third party also bears the risk of loss while promoting the transaction, so the third party will retain a part of each transaction - the retained part is called spread!

Instrument Minimum Spread Typical Spread Long Position Short Position
AUDCAD 0 1.3 -1.9 -2.3
AUDCHF 0 0.9 0.16 -2.48
EURJPY 0 0.5 0.14 -7.18
EURUSD 0 0.1 -5.8 0.2
GBPAUD 0 2.5 -2.2 -7.1
GBPJPY 0 1 2.7 -10.34
GBPUSD 0 0.3 -4 -2
USDCAD 0 0.2 -1.6 -4.2
USDCHF 0 0.4 0.8 -5.1
USDJPY 0 0.1 -0.4 -4.2
Instrument Minimum Spread Typical Spread Long Position Short Position
AFRICA40 9 17.74 -8.487 3.848
AUS200 1 1 -0.461 -0.431
DE30 0.8 0.91 -1.005 -1.37
FRANCE40 1 1 -1.877 -3.004
HK50 14 14 -1.989 -1.672
ITALY40 10 10 -1.829 -2.945
JP225 5.2 6.04 -1.813 -1.882
SPAIN35 4.2 4.2 -1.811 -2.907
STOXX50 1.5 1.5 -0.181 -0.282
SWISS20 3.4 3.4 -2.003 -2.89
Instrument Minimum Spread Typical Spread Long Position Short Position
XAGUSD 0 0.021 -0.918 0.069
XAUUSD 0 0.09 -6.81 0.19
Instrument Minimum Spread Typical Spread Long Position Short Position
#EURBOBL 0.026 0.026 -2.336 -2.914
#EURBUND 0.026 0.026 -7.723 2.238
#EURBUXL 0.042 0.042 0.421 -5.716
#EURSCHA 0.018 0.018 -2.833 -2.417

How do you calculate the spread?

Point spread itself is measured by "point", which is the smallest unit of price change of currency pair. Therefore, the point difference in the example below is 0.2 points.

What are forex spreads?

Very simply, interest is an overnight interest that a trader must pay to hold an overnight open position. When a trader wants to continue to hold an uneven position, he will pay interest on the selling currency and charge interest on the buying currency. Therefore, regardless of the long or short positions held by traders, or the current market situation, the interest rate is based on the interest rate of the countries involved in the currency pair.

How do you calculate your transaction costs?

To calculate the cost of the transaction itself, you need to calculate the spread and point value, and multiply them by the number of hands you are trading:

Transaction cost = spread × transaction scale × point value

For example: a transaction you made is < 1.2 point difference >.
In this example, the minimum number of hands you trade is 10000 basic units.

The point value is $1, so the transaction cost is $1.20

The larger your transaction volume, the higher the transaction cost!

Significant interest / rollover rate facts

  • The interest rate is applicable to 00:00 platform time.
  • Each currency pair has its own interest expense, and the measurement standard scale is one hand (100000 basic units).
  • Interest will apply to your open position every night and will apply to the new "value date" when the position remains open.
  • On Wednesday night, however, the value date for open positions changed to Monday. As a result, the interest charge is three times the interest rate.
  • View your interest on the MT4 market report panel. All you have to do is right-click, select symbol, select tools, and then select property.