Forex Commissions

As any service, the trading services should be paid for. The commission charged on Forex is called a spread. Essentially, the spread is a difference between the currency’s buy and sell prices. Furthermore, there is a swap - a commission for rollover, i.e. holding a position open overnight. In this section we have an article providing more details about swaps. Besides, traders may be required to pay fees for funds withdrawal. 

Normally, the commission size depends on certain factors such as an asset’s liquidity. For example, popular currency pairs have much smaller trade commissions than exotic ones. Mostly, the commission values between classical and exotic currency pairs may differ greatly. The volume of trades also makes a difference. Speads are charged proportionally to the lots, i.e. small fees are charged for small deals and vice versa. The market conditions are also important in determining the size of forex commissions. Brokers that charge floating spreads often scale up their cost of service in the period of high volatility such as macroeconomic news releases. Alternatively, there can be a fixed spread which is a fee staying unchanged regardless of the market conditions. 

When choosing a Forex broker, pay attention to its cost and charges policy. There should be no hidden fees. The broker should be crystal clear and transparent about its spreads, swaps and other commissions.