Forex: Choose between a spread or commission broker

To trade in Forex or foreign exchange markets under the best possible conditions, you need to choose the right online broker. Different criteria must then be taken into consideration to ensure that they are registered on the best platform.Of course, we will only turn to a trustworthy operator offering quality services. But another criterion must also be taken into account: in particular, you must choose between spread and commission brokers. The brokers who

practice spreadsThe

brokers who practice spreads are the most numerous. These spreads can be either fixed or variable. This second option is the most common, with brokers basing themselves on the last decimal place of the value of currencies. To better decide between a spread broker and a commission broker, it is important to understand that the spread constitutes a commission that is withdrawn by the online broker on each of the transactions. It is a remuneration that it charges in return for its role as an intermediary between investors and the financial markets. It is then necessary to look for brokers with the lowest spreads such as Plus500. A broker like Avatrade offers slightly higher spreads on the most common pairs but benefits from .

Brokers who take commissionsThe

commission levy seems to be the most interesting option as this alternative is more transparent. By choosing a broker who practices it, the trader always knows with forecast the amount of the levy charged to him for each transaction. In general, brokers practice a very low or non-existent spread on unavoidable pairs, so if the trader turns to this type of broker, it is important to be careful when reading the follow-up of ongoing transactions. Whether it is a gain or a loss, do not forget to subtract the amount corresponding to the commission to determine the actual total amount. FXCM for example takes a commission on each of your transactions. This commission is extremely low, from a few cents to more than ten euros depending on the size of your positions. This allows the broker to offer ultra tight spreads. Finally, it should be noted that the choice of a broker who practices commission or spread depends on the trader’s profile. Thus, if the latter practices very short-term trading, it is preferable to turn to a commission broker. Losses can quickly be significant. On the contrary, with a broker charging commissions. It is then the volume of transactions over a long period of time that influences the final cost.