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Confused with base currency exhange


Guest SomeoneToldMe

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Guest SomeoneToldMe

Hello long term index trader (on other platforms) new to FX. 

My base currency is SEK but I have so far only played around with EURUSD in a demo account trying to learn the FX profession. 

How is the exchange rate determined from SEK to EUR when I enter a trade? Is it per tick intraday? Does this mean a gamble on EURUSD is as much a gamble on SEKEUR? Is this exhange taken into account in the demo account or will the fee for exchanging SEK to EUR be a nasty surprise once I go live? 

Or am I overthinking this? 

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The answer to your question is that there will not be a nasty surprise. You will lose only 0.3% on the P/L transfer to SEK at the END of the trade. So that is only a tiny bite out of the exact profit or loss, not on the underlying. You are likely already paying this on your demo account, but it was too small to detect.

The exact details depend upon whether you have a CFD or spread betting account. In your case (I am guessing) of a euro-denominated spread bet on EUR/USD making EUR 100 profit/loss, you will receive EUR 99.70 / pay EUR 100.30 worth of SEK. It doesn't matter that the underlying may be EUR 100,000, that doesn't enter into the calculation.

Your demo account is identical to a live account intra-day. (But it doesn't reflect overnight finance charges, where the 0.3% currency conversion charge to SEK, though still there, will be lost in the rounding error.)

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