Fee Structure

Hey Guys

i’m new to the forex business. Can somebody tell me how is the fee structure in forex brokerage in percentages? I get confused with all the spreads, pips, and leverages.

Thank you so far

Paul

Hi Paul,

as I started learning forex, I spent some time to collect such information and make a small summary for myself. And finally discovered those small pips are more dangerous than they seem, at least for beginners like us. So from a beginner to a beginner:

I will depict 3 types of accounts depending on leverage and min trade size.

Account type 1. Typical trading conditions
Min size: 100€
Leverage: 1:200

Example 1 - mini:

Minimum trade is 0,01 Lots, equivalent to a transaction volume of 1000\$. This is a leveraged volume, so the real volume is 5\$ obtained by dividing 1000/200

The spread is payed onto the transaction volume, 3 pips on 1000\$ are 0,3\$. Finally you are paying 0,3\$/5\$ -> 6% fees!

Account type 2. Typical trading conditions

Size: 500€
Leverage: 1:200

Example 2

Minimum trade is 0,1 Lots, equivalent to a transaction volume of 10,000\$. This is a leveraged volume, so the real volume is 50\$ obtained by dividing 10,000/200.

The spread is payed onto the transaction volume, 2 pips on 10000\$ are 2\$. Finally you are paying 2\$/50\$ -> 4% fees!

Account type 3. Typical trading conditions

Size: 2,500€
Leverage: 1:100

Example 3

Minimum trade is 0,1 Lots, equivalent to a transaction volume of 10,000\$. This is a leveraged volume, so the real volume is 100\$ obtained by dividing 10,000/100.

The spread is payed onto the transaction volume, 0,8 pips on 10000\$ are 0,8\$. Finally you are paying 0,8\$/100\$ -> 0,8% fees!

Hope someone can complete with other examples. But the fees heavily depend on the broker. As a general rule, the higher the leverage the higher the fees. This makes sense, as you are getting much more volume.

Somehow I posted double, sorry about that.

Hey thanks for the comprehensive summary, I also did some calcs but I was not sure about my results. Certainly 3 pips seem to be a bit too much for me. But I guess as a beginner there is no alternative, if you do not want to risk too much capital.

I´ve read the results with a demo account are not to take into account, as the mental pressure from losing trades is not affecting the judgement. So I am wondering about killing a couple of 100€ accounts before getting into something real.