Trade Currency and Price Currency

When you trade, you will always trade a combination of two currencies. For example, you will buy US dollars and sell German marks. Or buy German marks and sell Japanese yen, or any other combination of dozens of widely traded currencies. But there is always a long (bought) and a short (sold) side to a trade, which means that you are speculating on the prospect of one of the currencies strengthening and one of them weakening.
The trade currency is normally, but not always, the currency with the highest value. When trading US dollars against German marks, the normal way to trade is buying or selling a fixed amount of US dollars, i.e. USD1,000,000. When closing the position, the opposite trade is done, again USD1,000,000. The profit or loss will be apparent in the change of the amount of marks credited and debited for the two transactions. In other words, your profit or loss will be denominated in German marks, that are known as the price currency. As part of our service, Saxo Bank will automatically exchange your profits and losses into your base currency if you require this.
This way of trading is different to the futures markets, for example, where the marks, francs and yen are the fixed trade currency, resulting in a US dollar denominated profit or loss. You can, however, also choose to trade in this reciprocal manner in foreign exchange markets but it is not the norm.

Dealing Spread, but No Commissions
When trading foreign exchange, you are quoted a dealing spread offering you a buying and a selling level for your trade. Once you accept the offered price and receive confirmation from our dealers, the trade is done. There is no need to call an exchange floor. There are no other time-consuming delays. This feature is a great advantage in times of fast-moving markets: Where the market trades and you know whether you are filled or not.
The dealing spread is typically around five points in normal market conditions, e.g. USD/DEM 1.7780-85. This means that you can sell US dollars against the German mark at 1.7780 and buy at 1.7785. There are no further costs, no commissions or exchange fees.
This ensures that you can get in and out of your trades at very low slippage and many traders are therefore active intra-day traders, given that a typical day in USD/DEM presents price swings of 150-200 points.