Am I being ripped off on the exchange rate?

[crystak]

So at 16:22 bought 22 shares of Apple at 126.75 for $2,788.50 or £1,994.10. No commission, no charges.

Now, I could sell the 22 shares at 127.42 for $2,803 or £1,980.57.

The stock has gained 0.6% according to my P&L.

At 16:30 the GBP/USD was 1.40553 and it's now 1.40824. Difference of 0.00271 which is 0.1% higher (roughly).

HOW has the stock gone up and in dollars there's a roughly $15 profit yet in pounds there's £14 loss ??? Now I bought this in my ISA so it's a long term holding, but WHY is this discrepancy not better publicised?

Is this why IG is offering free trades for US stocks because they are making their margins on foreign exchange by offering very bad rates??

Edited February 22, 2021 by crystak

[dafttrader]

I'm presuming you don't realise this.

As I understand it, IG charge you 0.5% to change your £ into $, and then 0.5 to change it back again, so you lose 1%. I presume as they charge 0.5% per FX trade each way, they do not also have a spread between buy and sell.

However, your Apply shares will have a buy/sell spread. So if they were $126 on Nasdaq when you bought, you maybe have paid $126.5 to buy them, then when you sell you might only get $125.5.

[Jammad]

Good question, I'd also like more transparency on exchange rates in transactions.

[aneelmatt]

By offering free trading, which is actually not free because they take a large exchange rate fee- even when u buy or sell. 

 

it needs to be looked into by the SEC. or the relevant body in each country. 

even when the GBp/USD is up or down doesn't matter to IG they w ill always make sure we are at the receiving end. i am seriously considering switiching over to someone else more reasonable. 

 

[crystak]

So basically there is a roughly 1-1.5% difference because of the poor exchange rates they are passing on to the customers, which equals that same 1-1.5% as the commission they would be earning.

 

What is annoying about this is that this fact is not publicised anywhere, so this is very misleading. It would be interesting to see how this compares to other commission free companies for US shares.  Does anyone know?

Edited February 23, 2021 by crystak

[Guest Jbob]

From what I understand its not free to buy shares. There is a commission for opening and closing a trade as well as a small overnight fee. So unless you expect a higher return to fee ratio, then you are better on a different platform.  Shares, Commodities, EFTS,  Indices, and Forex trading all have different costs and fees, so its my advice not to buy into things before you read what they are. Its a learning process. I find it best to stick with Commodities and Indices as a day trader as there are no commissions on trading these as far as I am aware. 

You can check all the costs on the website otherwise, when you go to your dashboard and click trade analytics you will see the breakdown there.

If you are looking only to buy a couple shares in different stocks, with a small amount of money, then this is not the platform for you.

 

[Guest a learner]

It is the same with Trading 212 and hl . Trading in US stock is a have that long standing issue. 

Other option is to maintain a $ account in US and then trade, but that would involve TAX implication and benefit of ISA will be lost.  

There is no easy solution for this . If anyone have found a way to invest in US stock as a individual investor. please share 

 

[CharlotteIG]

We're sorry that the fees aren't as transparent as they can be. 

We have a team currently working on a big project that will clarify and break down charges. There's no set time frame on this but when there is I will update the feed

All the best 

[Jammad]

Yes agreed it is not clear, and will need some post analysis to work out what's going on, please hurry with that build i'm seriously considering moving platforms, not before clarifying my past trades and fees.

[alam1]

I found a similar markup between buy and sell rate almost within 15 minutes of buy and sell

and computed you lose 9% of value between the two on $ purchase/ sales

Criminal loot which is not transparent

[alam1]

Sorry.. I could not edit my message above...

I found a similar markup between buy and sell rate almost within 15 minutes of buy and sell

and computed you lose 1% of value between the two on $ purchase/ sales

Misleading since I thought I sold for a $ profit and ended up in a £ loss😪

[Stonk]

9 hours ago, alam1 said:

Sorry.. I could not edit my message above...

I found a similar markup between buy and sell rate almost within 15 minutes of buy and sell

and computed you lose 1% of value between the two on $ purchase/ sales

Misleading since I thought I sold for a $ profit and ended up in a £ loss😪

 

What would you consider an acceptable loss for buying and immediately selling?

1% is about what I would lose if I bought and immediately sold £5K-worth of any mainstream UK share through my share dealing broker (not IG).  That's two sets of commission plus stamp duty plus spread.  So I wouldn't consider your experience particularly unreasonable.

It's essential to understand the fees before dealing, to avoid this kind of surprise and disappointment.

[alam1]

Problem was I made a decision to sell based on seeing the profit (& placed the limit order),

If I knew clearly it would be a loss I would not have made a decision to sell it .

I chose IG to be mainly able to trade low volumes and access the US market without large capitals onto each stock

I think the problem is on the visibility of the currency (£ versus$) and I am now a bit more educated

 

[Stonk]

It sounds like maybe you're doing share dealing, whereas I'm using spread betting, but the following might have a useful analogue:

In my Positions window in the web interface, there is a column I've added (via the 3-lines hamburger icon at the top-left) called "Profit/Loss (GBP)", which converts the standard "Profit/Loss" column to my account currency.  I don't know, but it might take account of the exchange costs.  Might be worth a look, see if you've got anything similar.

I'd be a bit peeved if that column said I had a profit at the moment I closed a position, and then actually it turned out to be a loss.