Prior to trading forex, you'll have to open up a trading account with a forex dealer. There are no rules about how a dealer bearings a client for the services the dealer provides or that limit how much the dealer can charge. Before opening an account, you had better check with several dealers and comparison their charges also as their services.
A few firms charge a per trade commission, while other firms create their money on the spread between the offer and ask prices they give their customers. In the earlier example, the amount of the Euro spread is .0008 (the 1.2178 ask price minus the 1.2170 bid price). This means that if you purchased (or sold) the Euro and at once picked up and sold (or bought) it before the prices changed, you'd have a $.0008 loss on each Euro, or an $80 loss on a 100,000 Euro transaction. The wider the spread, the more the price has to motion before you break even.
While some forex firms promote “commission free” trading, they're still making money from your trades through the bid/ask spread. Before opening a trading account, make certain you know how all the parties affected are being compensated.
Retail forex transactions are normally ruled out by entrance into an equal but opponent transaction with the dealer. For instance, if you bought Euros with US dollars, you'd rule out the trade by selling Euros for US dollars. This as well is named an offsetting or liquidating transaction.
A lot of retail forex transactions have a settlement date when the currencies are due to be delivered. If you prefer to keep your position open beyond the settlement date, you must roll the position over to the next settlement date. Some dealers roll open positions over automatically, while other dealers may require you to request the rollover. Some dealers charge a rollover fee based upon the rate of interest differential between the two currencies in the couple. You should check into your agreement with the dealer to see what, whenever anything, you must do to roll a position over and what fees you'll pay for the rollover.
A few firms charge a per trade commission, while other firms create their money on the spread between the offer and ask prices they give their customers. In the earlier example, the amount of the Euro spread is .0008 (the 1.2178 ask price minus the 1.2170 bid price). This means that if you purchased (or sold) the Euro and at once picked up and sold (or bought) it before the prices changed, you'd have a $.0008 loss on each Euro, or an $80 loss on a 100,000 Euro transaction. The wider the spread, the more the price has to motion before you break even.
While some forex firms promote “commission free” trading, they're still making money from your trades through the bid/ask spread. Before opening a trading account, make certain you know how all the parties affected are being compensated.
Retail forex transactions are normally ruled out by entrance into an equal but opponent transaction with the dealer. For instance, if you bought Euros with US dollars, you'd rule out the trade by selling Euros for US dollars. This as well is named an offsetting or liquidating transaction.
A lot of retail forex transactions have a settlement date when the currencies are due to be delivered. If you prefer to keep your position open beyond the settlement date, you must roll the position over to the next settlement date. Some dealers roll open positions over automatically, while other dealers may require you to request the rollover. Some dealers charge a rollover fee based upon the rate of interest differential between the two currencies in the couple. You should check into your agreement with the dealer to see what, whenever anything, you must do to roll a position over and what fees you'll pay for the rollover.
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