Buying and selling currency — rate, commission and profit

This is the heart of the exchange business. In this episode you record one complete trade from start to finish, see exactly how the rate field works, where commission lands, and how Nexto calculates the profit on that trade. By the end you will also know when to use the cash trade form instead of the normal one.

What you will learn

• How to pick the direction of a trade from your own side, not the customer's
• The rule that ties the two currencies, the amount and the rate together
• Why commission is kept separate from trade profit
• How weighted average cost decides when profit is realised
• How to use the trades list, its filters and its exports at the end of the day
• When a walk-in customer belongs on the cash trade form instead

Step by step

Choose the direction

The first choice is direction. Are we selling to the customer, or buying from them? Always think of it from your side, never from theirs. In this example we are selling currency to a customer.

Pick the customer and the two currencies

Part of the name, the code or the phone number is enough to find the customer — here, Persepolis Exchange. Then the two currencies: the one we sell, the one leaving us, US dollars; and the one we receive in return, Canadian dollars, our reference currency.

Enter the amount and the rate

The amount is twenty five thousand dollars. As soon as you type it, Nexto starts waiting for the rate — because a trade has three numbers, and if it knows two of them it works out the third itself. Type the rate and the other side fills itself in; it works the other way round too, so you can type the total and Nexto derives the rate.

The golden rule here: the rate always means «how many of the second currency for one unit of the first». Get the direction wrong and the number will be nonsense — but the rate guard covered in rates and revaluation will warn you.

Set the commission

Commission is its own section, and it's good that it stays separate. If we charge the customer, we say receive; if we pay it, we say pay. You can enter a percentage or an amount. Nexto does not mix this into the trade profit — it books it to its own income account, because later you will want to see the two separately.

Add the trader and description, then record the trade

Two more fields: who did the trade — if you have several traders, the commission report is fed from here — and the description. Don't leave the description empty; in six months the person reading that statement will be you. Then press record trade.

Read the document and understand where profit comes from

The document shows everything at once: the customer account was debited in one currency and credited in the other, the till took the counter-value, and the commission went to its own account. One balanced accounting document, out of a single form.

As for the profit, Nexto uses weighted average cost. Every purchase updates the average cost of what you are holding, and profit is only realised when you sell out of that stock — that is, when the position is reduced. A rate going up does not book you a profit.

Work the trades list at the end of the day

The recorded trade drops into the list. Each row shows the direction, the customer, both currencies, the rate, the commission and the profit made on that trade. The filter row is a proper end-of-day tool: only today's trades, only one currency, only one customer, only the profitable ones. And like every list, there is an Excel and a PDF export.

Use the cash trade form for walk-ins

There is also a cash trade form. The difference is that there is no customer account here. It's for the person who walks in, hands over money, takes their currency and leaves — with no account at all. Only two tills move. If the customer has an account with you and the balance matters, use the normal form. The in-app page help (the ? icon at the top of the page) has more detail.

Tips

• Choose the form deliberately. Put every walk-in on the normal form and your account list fills up with names you'll see once and never again.
• Keep commission out of the rate. Because it is booked to its own income account, you can later see trade profit and commission income as two separate numbers.
• A rate moving in your favour is not profit. Nothing is realised until you sell out of the stock and the position is reduced.
• Every trade quietly touches the currency position — the dollars you sold came off the stock, the Canadian dollars you took went on. That page is covered in where is the money.

FAQ

Should I type the rate or the counter amount?

Either — a trade has three numbers and Nexto works out the third from the two you give it. Type the rate and the counter amount fills itself in; type the total and the rate is derived. Use whichever number you actually agreed with the customer.

Which way round does the rate go?

The rate always means how many units of the second currency you get for one unit of the first. If you enter the currencies in the wrong order the rate will look nonsensical, and the rate guard will warn you before you post something odd.

How is the profit on a trade calculated?

Nexto uses weighted average cost. Each purchase updates the average cost of the currency you are holding, and profit is realised only when a sale reduces that position. This is why holding a currency while its rate rises does not book any profit.

When should I use the cash trade form?

Use it for the walk-in whose business ends at the counter — money in, currency out, no account involved. Only two tills move and no customer account is created. If the person has an account with you and their balance matters, use the normal trade form instead.