Currencies (FX)

Forex trading - also known as FX or currency trading – is one of the most widely traded markets in the world, offering the ability to profit from any change in the exchange rate of one country’s currency against another. 

Spreads and Margins

Spread betting currencies enables you to net a potential profit from fast moving prices on hundreds of currency pairs, including the major and minor currency pairs. 

All of our currencies spreads are Capped Variable. Find out more about Capped Variable Spreads. 

We offer tight spreads from 0.8 pips on EUR/USD and from 1 pip on GBP/USD and USD/JPY. Our currencies margins starts from just 1% on major and minor currency pairs. 

You can trade currencies across all our 3 account types, including Beginners, Standard and Limited Risk. 

* All currencies spreads are Capped Variable. Spreads may vary according to the underlying market spread, market conditions and liquidity. 

Our market information sheet details our full spreads range and can be accessed via the online trading platform.

What Affects Forex Prices? 

Forex prices are influenced by a multitude of factors, from international trade or investment flows to economic or political conditions and country credit ratings. High market liquidity means that prices can change rapidly in response to news and short-term events, creating multiple trading opportunities for retail forex traders. 

Some of the key factors that influence forex prices are: 

• Political and economic stability 
• Monetary policy 
• Currency intervention 
• Natural disasters (earthquakes, tsunamis etc)

See our spread bet examples page located in our how to spread bet section for more information on how you can spread bet currencies.

Pricing

All forex is quoted in terms of one currency versus another. Each currency pair has a ‘base’ currency and a ‘counter’ currency. The base currency is the currency on the left of the currency pair and the counter currency is on the right. For example, in EUR/USD, EUR is the ‘base’ currency and USD the ‘counter’ currency. 

Forex price movements are triggered by currencies either appreciating in value (strengthening) or depreciating in value (weakening). If the price of EUR/USD for example was to fall, this would indicate that the counter currency (US dollars) was appreciating, whilst the base currency (euros) was depreciating.

When trading forex prices, you would buy a currency pair if you believed that the base currency will strengthen against the counter currency. Alternatively, you would sell a currency pair if you believed that the base currency will weaken in value against the counter currency. Some examples of major currency pairs are:

• EUR/USD (The value of 1 EUR expressed in US dollars) 
• USD/CHF (The value of 1 USD expressed in Swiss francs) 

Pips (Percentage in Points)

Pip stands for Percentage in Points. Most currency pairs are quoted to 5 decimal places with the smallest change from the 4th decimal place (0.0001) in price commonly referred to as a ‘pip'. For example, if the price of the EUR/USD forex pair moved from 1.41800 to 1.41920, it is said to have climbed by 12 ‘pips’.

Spread

The difference in the BID/ASK of the currency pairs is referred to as the 'spread'. An example would be EUR/USD dealing at 1.41800/1.41808 (in this case the spread is 0.8 pips or 0.00008). The exceptions to this are the JPY pairs which are quoted to just 2 decimal places. A USD/JPY price of 76.41/76.44 displays a 3 pip 'spread'.

Capped Variable Spreads

We place a ‘cap’ or ‘ceiling’ on the maximum amount our currencies spreads can go to, to ensure that Finspreads traders benefit from lower dealing costs even in times of high forex volatility. For example, our spread on GBP/USD is capped at 5 pips. This means that even if the underlying GBP/USD market spread is 8 pips, our spreads will remain fixed at 5 pips until the underlying market spread retraces back below our capped 5-pip limit. At this point, our spreads will then begin to track the underlying market spread once again unless the capped upper limit is breached once more.

Why do we offer Capped Variable Spreads?

We believe that Capped Variable spreads gives you a distinct advantage over other retail traders by allowing you to trade the tightest forex spreads during periods of high market liquidity, and also trade tighter spreads during periods of low liquidity. 

1) Competitive Spread Advantage

Capped Variable Spreads is a brand new concept to retail forex trading and gives you a competitive spread advantage over retail traders elsewhere. This means that whilst some forex traders may have to trade at spreads of 8 points or higher during periods of low liquidity, as a spread bettor, you have the distinct advantage of trading at cheaper forex spreads. 

2) Cheaper to Trade Around Key Economic Events 

Trading in and around events such as the Non-Farm Payrolls or GDP figures can trigger sharp swings in forex prices and cause wider spreads. Using our Capped Variable Spreads, you can trade these events much more efficiently and with cheaper spreads than the underlying market may otherwise dictate. 

3) Ease of Mind 

Our clients can trade with peace of mind, knowing that even in the most volatile market conditions, where spreads can widen excessively, our forex spreads will remain between fixed capped levels. 

4) Price Improvement Technology

Slippage is common in the forex markets, particularly when prices are moving quickly. One of the downsides of slippage is that if a price moves by the time your trade is placed into the market, your execution price could be slightly worse. 

What is Slippage?

The difference between the expected opening price of a trade and the price at which the trade actually executes is called slippage. Slippage, also known as market gapping, often occurs during periods of higher volatility, when market orders are used, and also when large orders are executed when there may not be enough interest at the desired price level to maintain the expected price of trade. 

Making the Most of Slippage

Our Price Improvement Technology makes it possible for us to give you a better price, where possible, so you can use slippage to your advantage whenever it occurs. Price Improvement Technology enables us to execute trades at better levels if prices move in your favour by the time your trade is placed.

For example, if the EUR/USD bid price is 1.4035 when the trade is executed and the price improves to 1.4036 (one pip improvement), the trade will be executed at the improved price of 1.4036 to give you another distinct advantage over other retail forex traders.