77% of retail CFD accounts lose money

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77% of retail CFD acc... 77% of retail CFD accounts lose money

01
How Do You Compute a Spread?

## Computation

To compute a sample spread, take note of this example:

If you BUY a Bitcoin at \$75.00 and the real-time SELL price is at \$74.25, the spread would be the difference between the two which is \$0.75 or 1.00%.

Remember: Because of the difference between the BUY and SELL prices, opening a new trade always produces an immediate loss. Spreads are also variable since it is driven by market conditions.

Remember that it is much better for the trader if the spread is lower.

02
What are the Spreads on Currency Pairs?

## Forex

Here are the typical spreads for the top 10 currency pairs traded on eToro

EURO / US Dollar = 1 Pip

US Dollar / Japanese Yen = 1 Pip

GBP / US Dollar = 2 Pips

US Dollar / Swiss Francs = 1.5 Pip

New Zealand Dollar / US Dollar = 2.5 Pips

US Dollar / Canadian Dollar = 1.5 Pip

EURO / GBP = 1.5 Pip

EURO / Japanese Yen = 2 Pips

GBP / Japanese Yen = 3 Pips

Australian Dollar / Japanese Yen = 2 Pips

Remember: These are the average spreads. Spreads on currency pairs can fluctuate according to the market.

03
What is a PIP in eToro Spread?

## PIP

A PIP is a term for "point in percent". It denotes the smallest decimal point in the price of a financial instrument.

However, eToro has now extended to include another decimal point called the "pipette", to provide a more accurate market price.

04
What are the Spreads for Cryptocurrencies

## Crypto

The following shows the popular cryptos traded on eToro and its corresponding spreads:

BTC = 0.75%

ETH = 1.90%

XRP = 2.45%

BCH = 1.90%

LTC = 1.90%

DASH = 2.90%

ETC = 1.90%

IOTA = 4.5%

IOTA = 4.5%

NEO = 1.90%

EOS = 2.90%

XLM = 2.45%

BNB = 2.45%

ZEC = 3.5%

05

Let’s show the example of Bitcoin. Currently, eToro’s spread on BTC is at 0.75%.

For example, you BUY and SELL a 0.1 unit of Bitcoin priced at \$5,500, then your spread fee should be \$41.25

The spread chart should look like this:

Initial Investment: \$5,500

Bitcoin Open Rate: \$55,500

Overnight fees: 0.00

Total fees: \$41.25

06
What are the Average CFD Spreads?

Even though CFD trading do not require ownership of a physical asset, it still incurs overnight charges and spreads. Here are the average spreads on various categories of financial instruments on eToro:

Currency pairs = typical from 1 PIP to 2.5 PIP

Commodities = From 2 PIPs to as high as 45 Pips for Gold, to 2,000 Pips for Palladium Future Contract, to 650 Pips for Cocoa Future Contract and so on.

Indices = from 0.75 points to as high as 12 points for China A50 Index for example and so on.

Stocks and ETFs (CFDs) = 0.09%

Cryptocurrency CFDs = Starts from 0.75%

07