What is a Single Currency CFD?
When you trade a normal CFD, your “stake” will always be determined by the product you are trading. This might mean that your account is in AUD, but your stake is in USD (eg if you want to take the Wall St 30).
When you trade a Single Currency CFD, your stake will always be determined by your choice of currency to trade in, no matter what you trade.
Quick Example – Australian Trader
You live in Australia and your account base is in Australian dollars. Let’s say you want to trade the DAX index. With a normal CFD, you will have to nominate your stake size per point in Euros (because the DAX is traded in Euros).
With a regular CFD, when you have a profit or a loss, this then gets converted back to Australian dollars. So you pay conversion costs when you buy and when you sell.
With a Single Currency CFD account, you will only ever trade in one currency, no matter what you trade.
You will select Australian Dollars as your base currency. This means that your “stake” will be in Australian dollars, even when you trade, say the DAX (normally in Euros), or the Dow index (normally in US Dollars), or Dollar Yen (normally in Yen per point).
No matter what you trade, your stake size and thus your profit and loss will always be calculated in your own currency.
Quick Example – Base Currency in Euro
Say your wish to nominate your base currency as Euros. As you are already trading in Euros, when you trade the DAX, your stake size will be evaluated in your base currency. Under a regular CFD, if you also trade the FTSE, then you would normally have a stake size in Sterling, and when you trade the Dow, you will be trading in US Dollars.
With Single currency CFDs, you can now trade it all in Euros. Your stake size in the Dow, the FTSE or any other CFD will be placed in Euros.
Why is this smart?
Your Own Currency
You never have to worry about converting your profits or losses from a foreign currency to your own currency.
No Conversion Fees
There are no foreign exchange conversion fees as you do not have to swap between currencies when trading different instruments.
Easier to Manage
It is so much easier to determine how much you want to risk per trade, based on your own currency, than in a foreign currency.
How do I open a Single Currency CFD Account?
Simply open an account with TradeDirect365. After you login to your account, go to the account summary section and you can add an account type. Select Cloudtrade Single Currency Trading. It’s that simple!