How are my GBP converted when I buy USD/JPY

flierdave

Newbie
5 0
When I trade from an account denominated in GBP will I be paying extra (i.e. the spread plus the loss in conversion) for each trade if I trade other (non GBP) currency pairs?

For example

Opening Buy: Customer BUYS USD500,000 @ 117.03

Later:

Prediction is correct and the US Dollar appreciates against the Japanese Yen. The quote on USD/JPY is now 117.65/68. To close your position, you decide to SELL USD500,000 @ 117.65 (the bid price)

Closing Sell: Customer SELLS USD500,000 @ 117.65

Profit/loss Calculation:

Size of trade x (sell price - buy price) = profit & loss JPY
500,000 x (117.65 - 117.03) = JPY310,000 profit

Or, converting the JPY310,000 back to USD at a rate of 117.65
(Profit/loss ÷ USD rate) = profit & loss USD
(310,000 ÷ 117.65) = USD2,634.93 profit

My question is this:
To make the opening buy how many of my GBP will be used and after my closing sell how many GBP will be put back into my account?
Or in other words
Will the bid/offer spread of GBP/USD be used so that I end up paying the spread on GBP/USD as well as the spread on USD/JPY?

Thanks in advance for any advice on this - I have not as yet traded a live account but I am getting very close.

Dave
 
 
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