Hi
I’m still learning CFD and Forex trading on the demo account and I’d like to get clarity on something. Apologies if it’s something I should already know.
Why is it that immediately after opening a long or short position there is a red negative amount under result? What determines the amount?
Thank you
This is due to the price of the BUY and SELL price being different. Called the “Spread”.
So the buying price is slightly higher than the sell price, by default.
Also, if you keep a position open overnight, there will be SWAP fees incurred.
Remember to factor this in, as on a large position size it can slowly add up. Some currency pairs actually end up paying you overnight though, so keep an eye on it.
In the image below, if I hold Short positions over night, and don’t hold LONG positions, I get paid to keep them overnight.
Thank you! Will keep an eye on swap fees.
Spread is the very very very important thing you need to be aware and mindful of. You always buy high and sell low. Long or Short you are red as soon as you take a position. Since the spread is not fixed for most instruments (I am not sure if there’s any instrument with fixed spread at trading212), the spread might be wider when you want to close a position. I have asked a question around spread which is not answered yet: Does trading212 quote spreads based on a customer's open positions?
I wouldn’t worry too much about swap as it’s a small fee for overnight holds and it’s fixed.
