Wednesday, 30 September 2009

Spreads not Commissions

Spreads not Commissions

When trading foreign exchange, you are always quoted a 2-sided dealing price where you can buy or sell the trade currency. The difference between the buy and sell price is the spread
The dealing spread is typically around 5 basis points or pips under normal market conditions, e.g. EUR/USD 1.2250-55. This means that you can sell Euros against US Dollars at 1.2250 and buy Euros at 1.2255. There are no more costs, no commissions or exchange fees because so called commissions are built into the spreads. The wider the spread the bigger the commission

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