Losses can exceed deposits
We’re completely transparent about any charges that may apply when you trade forex with us. These could arise if you hold a spot FX position open overnight, for example, or if you choose to implement certain trading tools that we offer.
Since your initial margin only represents a small deposit to open a position, we effectively lend you the rest of the money required.
This means that while there is no funding fee to close a daily funded bet or cash CFD position the same day, we will reflect the cost of keeping your position open overnight (after 10pm UK time) with an interest adjustment.
Our FX funding is based on the current tom-next rate. Tom-next is calculated based on the difference in points between the interest paid to borrow the currency that is being notionally sold, and the interest received from holding the currency. We receive tom-next rates from our brokers, and as these rates change daily, the funding fee varies accordingly. We add an administration fee of 0.8% pa for spread bets and mini CFD contracts, or 0.3% for standard CFD contracts, to the prevailing tom-next rate.
With forwards, the administration fee is taken into account within the spread, helping you to identify the break-even level on your deal.
More forex pairs
When you trade forward spread bets on a currency pair, you’ll notice that the buy and sell prices differ from the spot price of the same pair. This is because of the difference in interest rates between the two currencies that you’re trading.
Suppose you go long on one of our spot forex pairs, and the first (base) currency has a higher interest rate than the second (quoted) currency. If the difference between the two rates is great enough, you then earn interest on that trade, which is credited to your account each night the position is open.
Due to this, forward prices are adjusted to account for the interest you’d receive trading on the spot price, up until the expiry date of the bet.
Hence, forward contracts in which the base currency has the higher interest rate will be cheaper than the spot price, and forward contracts for which the quoted currency has the higher interest rate will be more expensive than the spot price.
When interest rates change, forward prices on affected forex pairs will adjust to compensate for this change, even if the spot price hadn’t moved.
You may need to pay extra for some of our additional services.
Our forex spreads fluctuate depending on the liquidity of the underlying market. Starting as low as 0.8 points, our spread will be narrower when spreads in the underlying market are tight. Similarly, as the underlying market spread widens, so will ours – though only to our maximum cap.
We calculate the fee for forex trades using the tom-next rate. As these rates change daily, the funding fee is different each day.
We include a 0.3% conversion fee on foreign currency bets.
If you choose to attach a guaranteed stop – set as a points value away from your opening position – we will ask for a small, one-off fee if your stop is triggered.
Tom-next is the rate used to calculate the funding adjustment when a forex position is held overnight. It is an industry-standard rate, defined by the difference in interest rate of the pair’s currencies and market expectations of interest rate change.