What are the costs of CFDs trading?
The costs associated with CFDs trading consists of Spreads, Swaps/Rollover Fees, and Maintenance/Inactivity fees.
Example: You trade 1 standard lot in EUR/GBP. The current bid and ask prices are 0.87868 and 0.87911, respectively. Therefore, you buy at the Ask price of 0.87911 and you close the position at the Bid price of 0.87868. The difference between the Bid and Ask prices is the spread. As such, the spread is 0.00043 (4.3 pips) which equals to GBP 43 (or currency equivalent). This is calculated based on the volume you trade, the point size, and the spread: 100,000 * 0.0001 * 4.3 = GBP 43.
Example: Every currency trade is based on borrowing one currency in order to buy another. Interest is paid on the borrowed currency and earned on the purchased currency. For instance, if we assume that the interest rates in Europe and the US are 2.5% p.a. and 4.25% p.a. respectively, and you have a buy position of 1 lot in EURUSD at 1.0878, you will earn 4.25% per year on your USD and pay 2.5% per year on your borrowed EUR. This means that with an open position you gain USD 5.48 per day [100,000* (4.5%-2.5%)/365]. This amount is credited into your account and is equivalent to 0.0001 pip per day [1.0878* (4.5%-2.5%)/365]. Similarly, if you have a short position in EURUSD, you lose USD 5.48 per day. Thus, rollover interest can provide an added stream of profit or loss for you.
Example: In the event that there is no trading activity (i.e. trading/withdrawals/deposits) in your account for a set period of at least thirty (30) calendar days, your account will be regarded to be ‘inactive’. Inactive accounts are charged a monthly dormant maintenance fee of EUR 100 or the full amount of the free balance in the account, in the case that the free balance is less than EUR 100.