An index and the ETF that tracks it
A published benchmark, a fund share and a trade each have a price story of their own.
Read articleIdentify the unit
EUR/USD expresses the price of one euro in dollars. A conventional XAU/USD gold quote expresses dollars per troy ounce of gold. The dollar serves as the quote currency in both cases. Say the unit before reading the number on screen, particularly if your order ticket displays volume in lots.
Translate the move into money
Suppose gold rises by two dollars per ounce. A long position equivalent to three ounces gains six dollars before charges. In a separate example, a rise of 0.0020 dollars per euro increases the value of a long position of 3,000 euros by the same six dollars. Equal downward moves reverse the direction of those results.
Look up the actual instrument
Two gold products can have similar labels yet different contract sizes, settlement methods or expiry dates. CME, for example, specifies a financially settled one-ounce gold futures contract. A broker offering a gold contract for difference sets out the quantity represented by its own order size in its product specification. Read the specification that matches the instrument on your ticket.
Make a comparison card
For each instrument, note the product, quoted unit, amount represented by one contract and account currency. Apply a hypothetical price move to one unit and then to the whole position. That short calculation catches a common mistake when switching between markets that both use dollar prices.
