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I am testing a demo trading platform that allows me to operate both in spot and forward outright contracts. If I open a spot position in EURUSD for 50,000 and at the same time a forward with maturity on March 19, the same P/L does not appear in the account summary (gain/loss)
I think I understand your doubt... $32 in spot seems too much for a 50k position if it's just for spread... that would be more than 6 pips... As for the forward, normally spreads there are bigger. Also, they don't always follow the same movement of spot price, although at maturity they should be quite aligned, considering interest rate differentials. I hope you will be served this info... Pete
The difference in P/L can also be due to forward points, which reflect the interest rate differential between the two currencies. If you do not take that into account, you will always see rare differences.
You're just looking at the spread but you forget the time factor. A forward contract has a premium or discount based on the difference between interest rates. That creates that gap in the initial P/L.
It's not just the spread, it's the whole forward structure. Your platform is calculating forward points according to implicit rates, and that's not equal to the spread spot.
If you thought forward and spot were the same with different dates, you need to review basic coverage and interest theory. I recommend going back to the basics before continuing to operate.
Don't worry, many of us have confused that at the beginning. The difference is in how the forward is valued: it takes into account the expectation of future exchange rate and rate differentials.
You're messing with derivative instruments without mastering the elementary. It's not a good idea. Learn first to interpret forwards with implicit rates.
Your account uses mid price for P/L, but what prices are you using to value operations? There may be the error.
For that type of question, you better use an Excel sheet with forwards assessment formulas. It gives you total clarity.
Note also that many brokers put a slight premium on the forward that you don't always see directly. That difference translates to negative P/L when opening.
Remember that forwards are OTC contracts and each platform manages them differently. Do not expect to find exact parity with the spot.
The difference may be in the forward points adjustment. If the platform doesn't detail it, it looks like the forward is worse than it is.
You're on demo and you're already messing with forwards?
What you see is completely normal. The forward carries implied an expectation of future value and a rate. It is not the same as spot + time.
Another thing: did you check if there is any commission embedded in the forward? Some brokers put it in the price.
I'd tell you to do a reverse simulation: calculate what implicit rates would justify that difference of -33 USD. You'll see that everything fits.
A forward is nothing more than an instrument to cover future risk. Don’t expect it to have the same P/L logic as an instant spot operation.
The theory is clear: forward = spot + points. If those points are adjusted for something (costs, margins, different rates
Why don't you talk to the broker stand?
Your case is from book: spread + forward points + rate = initial difference. There is no mystery, only basic financial theory.
It's funny that you've noticed that, many don't even notice, it's a good sign that you pay attention to the details.
I went through the same thing. I solved it by reading about implicit forward rates. Once you understand that, it all fits.
Does your platform allow you to see forward points? If you don’t see it clearly, it’s like operating blindfolded.
Notice that if the broker uses forward rates not market rates but own, the differences can be even greater.
In the end the important thing is that on the expiration date converge. The rest are technical settings and spreads.
I think you're messing with something pretty standard, check it out with a forward calculator.
That kind of mismatch is used in many arbitration strategies. If you understand why it happens, you can take advantage of it.
What happens is that in forwards there is a hidden financial cost, and if you don't see it clearly, you'll get a scare with the P/L.
Forwards are complex contracts, even if they seem simple. The P/L is not calculated the same as in spot, so you see that difference.
One question, did you review the theoretical value of the forward based on the spot and the rate differential?
In my experience, that's normal.
Did you notice if the forward has a weekend adjustment or holidays? Those extra days add up to the P/L.
If you're going to continue operating forwards, it's imperative that you understand how forward prices are formed. Otherwise, you're going to operate blindly.
Don't mess with the numbers. It's simple: in spot you're paying just spread, in forward you pay interest as well.
Your mistake is to assume that the forward is equal to the spot plus the time.
Something similar happened to me and it turned out that the platform used different sources for the spot and the forward.
Did you check the interest rate implied in the forward contract? That’s what makes that difference.
Your explanation of understanding the basics seems to fall short. I recommend reading about forwards calculation with interest rates.
The best thing you can do is compare that difference with what the forward formula says: F = S * (1 + i_d