International currency exchanges Forex is a trading area where currencies are bought and sold. To this day, the Forex market is one of the largest and most profitable financial exchanges. The rolling operational value reaches around 4 trillion dollars per day. Among market participants, there are banks and financial companies, as well as private individuals – traders. The hallmark of the Forex market is that it is different from other financial exchanges, where it works on time for 5 days a week, which provides an opportunity to gain permanent profits.
A trader who operates on Forex has the opportunity to get big profits by investing a small amount of funds. Although, in addition to benefiting from Forex, traders must also pay commissions. Forex market commissions are fees charged for trading operations. The commission can be charged for the purchase or sale of a currency. The main commission on Forex is called spread. Spread is the difference between the buying and selling price of a currency. Furthermore, there are running commissions charged every day while trader transactions remain open. There is a commission paid by the trader, for example for withdrawing funds or opening an order.
First of all, Forex commissions are small, however, if a trader works in the short term, opens and closes several transactions per day – the commission will be slightly higher.
Usually, the amount of commission depends on certain factors:
- Liquidity of a currency pair. Therefore, for example, a popular currency pair has a trading commission that is much smaller than an exotic currency. Often, the commission value between classic and exotic currency pairs can be very different.
- The operational volume that is executed can also be considered. Performing a very small, or otherwise very large operation – the cost will increase significantly.
- Conditions that greatly affect the amount of Forex commissions are market conditions. In the period of the release of macroeconomic news, experienced traders project – the number of commissions is growing. Lower liquidity also plays a role which is caused by a certain time of day or year – the commission will also increase.
There are a number of Forex commissions or spread types. Spreads can be fixed or floating, standard or for small accounts. Fixed spread is the number of spreads that do not change regardless of any conditions in the market. Floating spreads – is the fee charged is equivalent to 2 points when the market situation is stable, but it can change to 40-50 points, if there are unexpected events in the market.
Traders who choose a Forex broker to trade on the international currency market must take into account the size of the spread that appears. Traders must avoid brokers who promise to cover all expenses, because the broker’s profit is taken from the spread paid by the trader as a fee for trading operations. Traders must make a choice on the broker that gives you the opportunity to work in the market without additional commissions using the spread as payment for every successful transaction. Before opening a trading account with one of the Forex companies – do research among the most suitable Forex representatives.