The strength of the Australian dollar against the US dollar is currently at a 32 year high. Many market commentators are predicting that one Australian dollar will soon purchase one US dollar, a situation referred to by economists as parity. If parity is achieved, the question will then be whether the Australian dollar can continue its upward trend or whether a US dollar fight back will send it back south.
The uncertainty of what will happen at these historic levels can create trading opportunities for CFD forex traders who will be taking positions and looking to profit from this uncertainty. Using IG Markets’ PureDeal trading platform, CFD forex traders have the ability to view live prices and charts on a range of CFD forex pairs which can be traded online 24 hours a day. Once the CFD trader has decided which forex pair they wish to trade, they would need to decide what size trade to place and which direction they think the market will move.
The trader would need to ensure they have sufficient funds on their CFD trading account to cover the initial deposit required before placing the trade with one click of the mouse button. An example of how one of these trades might look would be as follows. You decide to go long on the Australian dollar against the US dollar. On 1 October 2010 our quote is 0.9692/0.9694 and you buy 1 mini contract (the equivalent of A$10,000) at 0.9694. The value of your forex position is A$10,000 x 0.9694 = US$9,694.
To open the position you supply a deposit of just 1% of the position.* Your deposit is therefore 1% x US$9,694 = US$96.94. There is no commission to pay on forex trades. A week later on 8 October 2010, the AUD/USD has risen to 0.9750/0.9752. You take your profit by selling 1 mini contract at 0.9750, realising a profit of 56 points or US$56. You will also need to take into account the effect of interest on your trade. For a full breakdown of costs please see IG Markets detailed forex example on their website.
To learn more about trading forex, including placing a trade on the PureDeal trading platform check out IG Markets free on-demand webinar, Forex Trading. Trading CFDs may not be suitable for everyone so please ensure that you fully understand the risks involved. Please consider the IG Markets PDS available from IG Markets before entering into any transaction with us.
About IG Markets
IG Markets specialises in financial derivatives, principally Contracts for Difference (CFDs) on over 7,000 global share CFDs, along with indices, forex trading, commodities, options, binaries and more. IG Markets is part of the IG Group, a UK FTSE 250 member with over 75,000 active clients worldwide. For further information please call 1800 601 799.