On a small scale you see this if you exchange money at a bank when you travel. How do we keep our spreads low?
Your ticket to the forex market
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See our deposit page for the various payment methods we accept. When one thinks about Forex as opposed to other global markets such as the stock exchange, some very basic differences should come to mind. We have already discussed the liquidity, volatility, and leverage offered in the world of Forex, so now we will learn a little bit more about the trading costs and commissions as compared to other global markets. Let us take the stock market for example. When one trades stocks, which by the way, is a very common occurrence for Forex traders a lot of people fail at stock trading and then turn to Forex, and rightfully so , the standard way trades are conducted is with the trader being charged commission on both sides of the trade.
What does that mean? When you trade stocks, you are generally doing it in cooperation with a broker, and that broker charges you a fixed dollar amount per trade, a dollar amount per share, or a scaled commission based on the size of your trade.
The vast majority of Forex brokers will advertise in very big letters somewhere on their site that they do NOT charge commission. With the exception of a few brokers, the Forex market lets traders open and close positions with no commission at all. So, it costs you nothing to trade. This of course begs the obvious question: You can be sure that they come out on top, and in a big way. The brokerages with lower spreads, often do charge commissions in addition to the spread.
It is extremely important to understand all the costs related to your trades before you make major decisions. Before we understand what Forex spreads are and how they are calculated, it is important to understand one main principle about how the Forex market works. It is all based on supply and demand, just like any other market. If there is a higher demand for dollars, the value of the dollar will go up vs other currencies. This is precisely how Forex spreads are defined and calculated.
So, for example, if you are opening a position in which the base currency is dollars, and since there is no shortage in demand for dollars, the Forex spread on this transaction will almost always be smaller than a spread on a less common currency. This is again because of supply and demand. This reduces the probability of clients executing profitable trades. Real MT4 floating spreads accounts with fxpro.
CFDs and Spread Betting are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs and Spread Betting work and whether you can afford to take the high risk of losing your money. With regards to the FSB authorisation, FxPro provides execution services and enters into principal to principal transactions with its clients on FxPro's prices; these transactions are not traded on an exchange.
CFDs are a leverage product and can involve a significant risk of loss.