Currency trading

Currency pairs, which can be found within the foreign exchange market, measure the value of one currency against another. The currency pair is split into the ‘base’ currency, which is the first named currency; and the secondary currency, which is called the ‘quote’ currency. The price displayed shows how much of the quote currency is required to buy one unit of the base currency.

When trading forex, the base currency is always quoted first, and it represents the currency you are buying. For example, if you buy pound versus US dollar (GBP/USD), you are anticipating a rise in the pound at the expense of the US dollar.

This is the secondary, or 'quote', currency in an exchange rate and can sometimes be referred to as the 'term' or 'counter' currency. Profit and loss is normally expressed in the amount of the secondary currency in forex trading.

the USD is the most commonly traded currency in the world

Bid-ask currency example

Every currency pair has a bid and an offer price. This is the rate at which you can buy a currency, and the rate at which you can sell a currency. The price maker (usually a broker) gives you a rate at which they are willing to buy or sell a currency pair.

The table below illustrates basic bid and offer prices.

Currency pairQuotationBidOfferClient buysClient sells
EUR / USD1.1200/011.12001.12011.12011.1200
EUR / GBP0.7210/110.72100.72110.72110.7210
AUD /USD0.7030/320.70300.70320.70320.7030
AUD / JPY84.35/3884.3584.3884.3884.38
USD / JPY119.97/119.99119.97119.99119.99119.97
USD / CHF0.9628/0.96300.96280.96300.96300.9628
GBP /USD1.5550/531.55501.55531.55531.5550

Currency pairs with the highest pip value

The last decimal place to which a particular exchange rate is usually quoted is referred to as a point or ‘pip’. Some online forex providers typically quote no more than a fixed 1-point spread between the bid and offer on major forex pairs, and liquid cross rates in normal market conditions.

In currency trading, traders often look for currency pairs with the highest pip values, as they are very useful for short-term strategies, such as day trading. The value of each pip depends on your lot size and the specific currency that you are trading. Pips can also be useful for calculating the amount of leverage that a trader can use when foreign currency trading.

If you are interested in how to trade currencies, start with our most traded currency pairs guide.

Leverage in currency trading

Leverage, also known as trading on margin, is a technique that allows traders to borrow capital and place a small deposit that is only a fraction of the full trade value. This gives them better exposure to the forex market and therefore, they have more access to digital currency trading. Leverage in forex is a particular appeal for traders, but although it can help to magnify profits if the trades are successful, it can also result in equal losses.

The currency market offers some of the highest leverage ratios, starting at around 30:1 or 3.3% margin rates. Read more about our margin rates for currency trading here.

Open a currency trading account

At CMC Markets, we offer currency trading on over 300 currency pairs, including all the major forex crosses. Our spreads for AUD/USD and EUR/USD start from 0.7 points, while our GBP/USD and EUR/GBP spreads start from just 0.9 points. We offer consistently low spreads on a number of popular currency pairs, and our typical forex spreads are a reflection of our pricing consistency through the day. Choose between spot prices and forward contracts, which are similar to futures.

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View the spreads, margins and trading hours for some of the most popularly traded currency pairs through spread betting and CFD trading:

ProductMinimum spreadMargin rate fromTrading hours
AUD/USD0.75%Sun 21:00 to Fri 21:00
AUD/JPY1.55%Sun 21:00 to Fri 21:00
AUD/NZD3.65%Sun 21:00 to Fri 21:00
EUR/CHF2.53.3%Sun 21:00 to Fri 21:00
EUR/GBP0.93.3%Sun 21:00 to Fri 21:00
EUR/JPY1.53.3%Sun 21:00 to Fri 21:00
EUR/USD0.73.3%Sun 21:00 to Fri 21:00
GBP/AUD2.45%Sun 21:00 to Fri 21:00
GBP/CHF3.23.3%Sun 21:00 to Fri 21:00
GBP/JPY2.53.3%Sun 21:00 to Fri 21:00
GBP/USD0.93.3%Sun 21:00 to Fri 21:00
INR/USD6.05%Daily 03:30-11:30/ 12:15-18:00 Mon-Fri
NZD/USD2.05%Sun 21:00 to Fri 21:00
USD/CAD1.73.3%Sun 21:00 to Fri 21:00
USD/CHF1.53.3%Sun 21:00 to Fri 21:00
USD/CNH10.05%Daily 02:00-17:00 Mon-Fri
USD/CZK3.05%Sun 21:00 to Fri 21:00
USD/DKK7.05%Sun 21:00 to Fri 21:00
USD/HKD5.05%Sun 21:00 to Fri 21:00
USD/HUF20.05%Sun 21:00 to Fri 21:00
USD/JPY0.73.3%Sun 21:00 to Fri 21:00
USD/MXN75.05%Sun 21:00 to Fri 21:00
USD/NOK25.05%Sun 21:00 to Fri 21:00
USD/RUB2.05%Daily 06:00-18:00 Mon-Fri
USD/SEK30.05%Sun 21:00 to Fri 21:00
USD/SGD6.05%Sun 21:00 to Fri 21:00
USD/TRY15.05%Sun 21:00 to Fri 21:00
USD/ZAR85.05%Sun 21:00 to Fri 21:00

Do you pay tax on currency trading?

There is no capital gains tax on profits from spread betting digital currencies, and there is no stamp duty to pay when trading CFDs either. However, tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

Currency trading app

Digital currency trading is available on our online trading platform, Next Generation, both as a desktop version and via mobile trading. Our award winning apps include mobile-optimised charting, along with the a range of indicators, tools and in-app support.

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Disclaimer
​CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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