Forex trading is a great way to keep assets as an investment. Whether you trade often or not, for every $1 traded, there are going to be fees. The commission fees vary by the brokerage firm and the volume of the trade. For example, Forex.com has a fixed commission rate of $5 for every $100,000 traded and $60 for every $1 million traded.
This is only one of the ways the brokerage firms make money. The other way around is adding spreads. With spreads, you have the option to not pay any commission but in this case, the spread is going to be slightly higher. You can also pay a commission on each trade but pay a lower spread. Which one is going to benefit you the most all comes down to how often you trade and the volume.
What is FX spread?
FX spread refers to a fixed spread where the investor pays a small amount between the ask price and bid price. This is also known as fixed commission since the spread doesn’t change. On the other hand, spread on its own means the basic cost you pay to make trades.
Commission vs. FX Spread
If you’re trading often, paying a higher spread with no commission is going to be more beneficial. Since the effect of spread on the ask price and the bid price is going to be only an insignificant amount, you can just see the current rates added with the spread. This should save you a lot of money in the long run since you’re not going to pay a commission.
I trade often which one should I opt-in?
Whether you trade at a large or small volume, trading excessively means you’re going to pay commissions often. Given brokerage firms don’t work like a subscription-based platform, you are bound to pay commission either way. Although this depends on the brokerage firm you’re working with a fixed spread is going to save you a lot more over a longer period of time.