FOREX FX – Online Tutorial Pt. 5
What it costs to
participate on an off – exchange foreign currency market.
Actually, there is a no
absolute answer. It depends, from the dealers.
Usually, there is no
commission; there is only the mark – up.
But, in real world there
are dealers who charge commissions for buying and selling pairs. Also, in case
your account is managed by a third person there may by also additional charges
for any kind of management fees.
What is commission?
A fixed amount of money you
need to place so your forex market orders to be executed.
For example each time you
buy or sell a currency exchange rate pair your account will be charged for 2
USD, 3 € etc.
In case of a managed
account according to financial industry practices, forex account manager use to
charge (1) an initial charge with the opening of an account, for example 2%
charge on the first deposit, (2) a sharing of the profits, for example 10% of
the profits and (3) same of them use to charge commission fees when they
execute buy and sell orders on behalf of you.
What is mark up cost?
In the previous forex
tutorials I have presented the exchange rate quote example of the EUR / USD 1,
4310/22 spread, this spread is reported online by a major bank.
Same dealers tend to widen
the offered spread, between bid and ask price, to their clients.
In the above discussed
spread the EUR / USD 1, 4310/22 is reported by a major bank, a dealer may widen
the spread and offer to his clients the EUR / USD 1, 4310/26 quote. The dealer
has marked up the spread by ,0004 on each side.
According to this tactic,
dealers widen the spread and make profit.
Conclusion
You need to study very
carefully your forex account agreement and to understand how dealer will charge
you for the trades.
Only through knowledge a
private individual can build a competitive advantage and achieve serious
financial goals in foreign currency exchange market.
Elias Stoikos
Relative Articles
Relative Resources
Δεν υπάρχουν σχόλια:
Δημοσίευση σχολίου