There are no commission fees in Forex trading.
This is technically true because most Forex brokers don’t take a cut from your winnings. Commissions are fees paid to brokers whenever anyone makes money, and it is usually a percentage of how much you win.
But while there are no such ‘commissions’ paid out to brokers, many people think that this means the brokers don’t charge them anything at all. Actually, the brokers DO charge you a certain fee - it’s just not based on a percentage of your winnings, that’s all.
Instead, most Forex borkers charge a transaction fee known as a ’spread’. Essentially they charge you a small fixed amount whenever you buy a currency pair, based on the size of your trading lot. The spread usually costs you about 2-5 pips, depending on the currency pair you’re looking at. If you’re trading buying one standard lot of the EUR/USD currency pair for example, and the spread is 2 pips, the transaction fee is $20 (1 pip in the EUR/USD = $10).
So now you know that you’re being charged every time you make a trade. How will this affect your trading strategy? Scalpers should all be aware about the exact pip spread their brokers charge because they will enter into numerous trades in each trading day… a 1 pip spread difference can save them as much as $100 every day.
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