Costs involved with trading international markets

[DesignerBud]

Hi,

I was wondering what were the costs involved with trading CFDs in the international markets. I have an account with CMC but can't seem to find any info on their website (I'm at work at the moment so can't log onto the software).

Even if it's not CMC, what would be the general costs involved with trading international CFDs. I think for a start there are commission charges, but any other charges?

 

[Richard Dale]

Hi,

I was wondering what were the costs involved with trading CFDs in the international markets. I have an account with CMC but can't seem to find any info on their website (I'm at work at the moment so can't log onto the software).

Even if it's not CMC, what would be the general costs involved with trading international CFDs. I think for a start there are commission charges, but any other charges?

With a CFD market maker such as CMC, all US trades are performed in USD, UK stocks in GBP, so you have a currency risk. You can, of course, hedge any trade in their spot FX market (FX trades are zero commission) but interest rate differentials apply (eg. Australia has a higher interest rate than US, so a long trade in AUDUSD will cost you money).

One thing to watch out with CMC is that they can fill your orders in premarket trading. I think this applies to NASDAQ stocks but worth checking out for other markets too. Premarket trading is notoriously illiquid so you might want to ensure you are actually placing the orders during the official opening hours.

Any profit or loss from a trade on CMC is kept in the base currency, so effectively you are short or long that amount. You can request at any time that your balance in XYZ currency is converted into AUD, so you remove any exchange rate risk.

Most other overseas CFD providers operate in much the same fashion too.

I recommend you try a few sample trades and see how you go. Be sure to report back here and let us know how you get on.