The Forex Trading costs are depending on the broker

The Forex Trading Broker determines the fees that a trader must pay when opening a position. There are cheap and expensive providers. The costs have a decisive effect on a trader’s profits. The cheaper the fees are, the higher your profit will logically be.

In many cases, 2 different account models are offered. The only difference here is how the Forex Broker earns his money. A distinction is made between a spread and a commission account. From my experience, the commission account is much cheaper and offers more advantages.

Often there are 2 fee models for traders:

Spread model: You pay an additional spread when a position is opened (this may depend on the market situation).

You pay an additional spread when a position is opened (this may depend on the market situation). Commission model: You pay a minimum spread (often 0.1 points or less) and you pay a fixed commission per 1 lot traded (100,000 of the underlying).

How the Forex Broker earns money from the spread?

Definition of the spread: The spread is a difference between the buy and sells price.

This spread can always fluctuate due to the market situation because there are not always enough buyers and sellers on one price (this rarely happens). This phenomenon is often seen with very strong price fluctuations (high volatility). The Forex Broker also adds a spread to the market spread to earn money.

In principle, the trader thus gets an execution on a worse price in the market. The difference between the order opening and the current market price is the broker’s profit.

Facts about the spread: