Dealing in CFDs - Are there additional fees/charges when using e.g. USD vs GBP

[vorin]

Hi,

My base account currency is GBP. Two scenarios:

1. I buy Wheat CFD at 600 for 1 USD per point

2. I buy Wheat CFD at 600 for 1 GBP per point

So after closing both trades also at 600 (meaning zero profit) and assuming the FX GBP/USD was 1.0 and stayed exactly the same throughout the trade, will IG charges/fees be different for those scenarios? Is there any additional FX charge?

Thanks

[KoketsoIG]

6 minutes ago, vorin said:

Hi,

My base account currency is GBP. Two scenarios:

1. I buy Wheat CFD at 600 for 1 USD per point

2. I buy Wheat CFD at 600 for 1 GBP per point

So after closing both trades also at 600 (meaning zero profit) and assuming the FX GBP/USD was 1.0 and stayed exactly the same throughout the trade, will IG charges/fees be different for those scenarios? Is there any additional FX charge?

Thanks

Hi @vorin

Thanks for your question.

Please note that there is an additional FX conversion fee of 0.5% which is added to the best available exchange rate.  CFD accounts are set to ‘instant’ conversion. This means we automatically convert any realised profit, loss, funding, dividend adjustments or commission to your base currency.

All the best,

KoketsoIG

[vorin]

Thanks for the answer KoketsolIG.

So to make sure I understand that correctly. In the above example the scenario 2 there will be an additional charge of 6GBP due to conversion of the funding [600 (wheat price) x 1 (1 USD per point) x 1.0 (GBPUSD FX rate) x 0.5% x 2 (to account for a conversion when buying and then selling the Wheat position)]. Is that correct?

[KoketsoIG]

9 minutes ago, vorin said:

Thanks for the answer KoketsolIG.

So to make sure I understand that correctly. In the above example the scenario 2 there will be an additional charge of 6GBP due to conversion of the funding [600 (wheat price) x 1 (1 USD per point) x 1.0 (GBPUSD FX rate) x 0.5% x 2 (to account for a conversion when buying and then selling the Wheat position)]. Is that correct?

@vorin,

To get the conversion charge,  you can simply multiply the amount converted by the rate (0.5% conversion added to the exchange rate). For example, if the GBP/USD exchange rate is 1 as you have used in your scenario, the FX conversion rate applicable would be 1x 1.005 = 1.005 which would be multiplied by the profit/loss. If there is no profit or loss then there is nothing to convert.

I hope this helps.

KoketsoIG

[vorin]

I see, so in my scenarios the charge would only be applied to profit/loss rather than the value of the whole position even if I chose to buy Wheat with USD per point rather than GBP, correct?

[KoketsoIG]

29 minutes ago, vorin said:

I see, so in my scenarios the charge would only be applied to profit/loss rather than the value of the whole position even if I chose to buy Wheat with USD per point rather than GBP, correct?

Yes, the profits/losses that you see on your ledger history will already account for the currency conversion.

Thanks,

Koketso IG