Day trading
What you learn in 3 minutesDay trading means opening and closing a position inside one session, so the position is not held overnight and no swap is charged. The money question is what the day costs before you are right or wrong: the spread, the commission if your broker charges one, and the size of each pip in naira. This lesson works through one EUR/USD day trade from entry to close, with every figure in naira.
One day trade on EUR/USD at 1.0850
| Step | Amount | Note |
|---|---|---|
| Instrument and price | EUR/USD at 1.0850 | the price used for every conversion below |
| Position size | 0.10 lots | one tenth of a standard lot of 100,000 units |
| Value of one pip | ₦108.50 | one pip on one standard lot is 10 units of the quote currency; 10 x 0.10 lots = 1 unit, converted at 1.0850 naira per unit |
| Entry | 1.0850 | buy at the ask price shown on the platform |
| Exit | 1.0870 | sell at the bid price 20 pips higher |
| Gross result | ₦2,170 | 20 pips x ₦108.50 per pip |
| Spread cost | ₦108.50 | a 1 pip spread already paid inside the entry and exit prices |
| Commission | varies by broker | some brokers charge per lot, some build the cost into the spread |
| Net result before tax | ₦2,061.50 | ₦2,170 gross minus ₦108.50 spread |
The broker may round the pip value, widen the spread around news, and charge commission or a conversion fee on top. Swap is not charged here because the position is closed inside the session, but a broker can still apply a small overnight cut-off rule if you close late.
The mistake people make here
The common mistake is to size the position by the profit wanted rather than by the cost of being wrong. A reader sees 20 pips and thinks about the gain, then uses 1 lot instead of 0.10, which multiplies both the result and the spread ten times. Another mistake is holding past the session cut-off to avoid a small loss, which turns a day trade into an overnight position and adds swap. Decide the exit before entry, and close inside the session you chose.Check yourself
EUR/USD is at 1.0850. What is one pip worth on 0.50 lots, in naira?
One pip on one standard lot is 10 units of the quote currency. 10 x 0.50 = 5 units. At 1.0850, that is 5 x 1.0850 = ₦5.425, so ₦5.43 per pip.
You open 0.10 lots at 1.0850 and close at 1.0880. What is the gross result in naira, and what is left after a 1 pip spread?
The move is 30 pips. At ₦108.50 per pip, gross is 30 x 108.50 = ₦3,255. The spread costs ₦108.50, leaving ₦3,146.50 before any commission.
Why is no swap charged on this trade?
Swap is charged on positions held past the broker's daily cut-off. This position was opened and closed inside one session, so it was never carried overnight.