# Forex: Interactive Brokers, City Index



## sleepy (25 October 2009)

Has anyone traded forex using a Broker such as IB Brokers or City Index (CFDs)?

Does anyone know what the differences are between say these type of brokers and a true Forex Broker.

I presume you cant choose lot size (ie., micro, mini, standard). And was just wondering if they are suitable or I need to open an account with a Broker dealing only in Forex.

sleepy


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## Mr J (25 October 2009)

*Re: Forex - IB Brokers, City Index*

Do you mean Interactive Brokers? They don't use lots, but a dollar amount. Lots make for cleaner accounting, but being able to choose the dollar amount allows for precise money management. Another difference is that they charge a 0.00005% commission ($2.50 per $50k) on top of the spread.


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## sleepy (25 October 2009)

Hi J,

Yes sorry .. was referring to Interactive Brokers.

I presume therefore that I can use the same approach to position sizing (e.g., 2% inital risk) etc that I use for stocks when buying curriencies via Interactive Brokers (or City Index) because they use dollar amounts.

I have noticed that City Index use different tick values depending on the currency pairs;

AUD/CHF 0.0001 
AUD/JPY 0.01 
AUD/USD 0.0001

Would this affect position sizing if my inital risk was for example $400 for all each 3 currency pairs?

sleepy


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## sleepy (26 October 2009)

Heres an example of what I mean ...

Account size = $20000,  
Risk 2% = $400

Buy AUD/USD  
Entry 0.9227
Stop 0.9197 

Using Forex Broker - Std lot ($1) this equates to ...
Long 13 lots 0.9227 (risk = $390)

But struggling to calculate the right postion size/quantity when its in *dollar *terms (i.e, CityIndex, Interactive Brokers).

sleepy


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## Mr J (26 October 2009)

To get position size in the base (first currency in pair) currency, I use:

(R * X) / (SL / 10000)

R = risk in AUD, X = currency rate between quote currency and AUD, and SL = stop loss in pips. For the JPY pairs, use 100 instead of 10000.

Example, AUDUSD, I want to risk AU$100 on a stoploss of 15 pips, and the current exchange rate is 92 cents:

(100*0.92)/(15/10000) = $61333.

Is that what you're looking for?


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