Forex Trading Broker Fees

Forex brokers provide you with the platform for trading on the currency markets. Most trader are not shy about making their own trade, yet a novice or beginning trader may be a bit timid. You can hire an accomplished broker to place your trade for you, but that’s really necessary if you spend some time to learn the foreign exchange market. There are many forex brokers that can service your fx trade, while there are several that won’t go near a client that doesn’t have 25k or better to invest.

A forex trading broker is exactly that, a broker between the buyer and seller of a particular currency. The broker will have access to state of the art hardware and software that will allow them to place a trade faster than you or I, but they will obviously be charging a fee for their services.

You may find certain similarities between the currency trading markets and the stock markets, but those similarities stop quickly, especially considering there are no broker fees in forex trading, only a fee that is called the spread and is built into every currency transaction by the broker.

The Forex Spread

The spread is the difference between the buy and sell price of a currency pair and is usually a very small difference in price. It can also be described in terms of “pips”. The pip is the smallest price change that can take place within an exchange rate. It is usually 1/100 of one percent, or one basis point.

A forex broker will be exceedingly faster than a bank when it trades currency, and a broker will have much better rates than a bank. This is because the broker is a dedicated currency trader with the facilities to place trades within the currency market much easier.

Your future in currency trading, along with your success will highly depend on how wisely you choose a currency broker that will not overcharge you fees and will place your trades quickly and efficiently. Currency rates change abruptly within a currency pair that is traded regularly like the EUR/USD, so the timing of your broker will play a more significant factor in the profitability of your trade than your broker’s fees.