The word competition is almost synonymous with the forex market. This is because competition is a part of each aspect of this market, including its currencies, participants, and brokers. The staggering number of online brokers flashing "No Fees, No Extra Charges" on their sites and banners makes it difficult for traders to make a sound decision. Any trader who has spent some time in forex trading knows that nothing comes for free.
An Introduction to Forex Brokers
A forex broker is a financial service organization that provides currency trading solutions via trading platforms.
Forex is short form of foreign currency exchange trading. Exchanges in the forex market are consistently between a couple of two unique currency.
How Forex Brokers Charge Fees
Forex brokers typically charge on forex trading on the basis of the spread, which is the difference between the bid price and the asking price. The bid price is the rate at which a trader can sell the currency, whereas the ask price is the rate at which the currency can be bought. Although fixed spreads are usually considered attractive options, this may not be the case in the forex market. The reason behind this is the volatility of the market. This market also has variable spreads on which forex brokers get rewarded. Variable spreads fluctuate between 1.5 pips and 7 pips, depending upon the currency pair you have chosen.
There are brokers who charge a commission on each trade. In this case, the broker forwards your order to a large market maker but the trader gets the lowest available spread.
Some forex brokers charge a rollover fee to continue an order at the end of a trading day to the start of the following trading day. Traders are also required to pay for special services, such as order cancellations, statements, telephone orders, or account transfers. These also include bank related fees for deposits, withdrawals, or returned checks. Brokers may even charge traders a monthly account maintenance fee if the account remains inactive for over 3 months. Traders could be charged a ticket fee threshold when they trade less than the minimum amount required.
The bottom line is that in the world of forex trading, there is no such thing as "No Fees, No Extra Charges".