Forex: account currency and exchange rate fee

[mla]

Hi,

I was wondering how exactly the account currency and exchange rate fees impact forex tading

Say I have an account in EUR

I trade the EURUSD pair. I buy at 1 and then sell at 1.0001.

First trade: The trade occurs in the base currency (EUR in this case), and since my account is in EUR, there would be no issues. Would the same apply if I was shorting the EURUSD?

Second/closing trade: 1 pip = 10 USD. So that would be a gain of 10USD. That I can keep in USD or exchange back to EUR at conversion rate + 0.5% commission.

 

I want to trade GBPUSD

First trade: The base currency is GBP so I would need to convert my EUR IG account currency to GBP (or only the traded amounted ?) 

* If I want to trade 100.000 units with 10.000GBP and leverage 10. Would I be paying 0.5% on 100.000 (traded value) or only on the 10.000 GBP required to open the trade?

* Since IG does not have multi currency account, I would need to pay the commission of 0,5% each time I want to shift between EURUSD and GBPUSD trading ? Is there no way of holding both GBP and EUR, and decide which one to use depending on the base currency traded?

Second trade: I would earn/lose USD

 

Thank you in advance for your help!

 

[RJo]

@mla, The following link contains a comprehensive explanation of fees for US traders: https://a.c-dn.net/c/content/dam/publicsites/igcom/us/files/IG_US_Costs_and_Charges.pdf

As you appear to be in the UK, you can likely substitute GBP for USD as the account currency and then figure it out. I searched IG's UK site for a similar disclosure but without applicable US CFTC/NFA regulation, it likely doesn't exist.

FYI... I don't worry too much about admin fees while trading single GBPJPY lots. It's generally only a $1.50 or so.

Edited February 15 by RJo