What is the forex Transaction Fee?

To allow the Dealing Desk to more easily calculate the net amount to offset on the market, some forex providers have reduced the spread from 5 pips to 3 pips and introduced a standard transaction fee of $1.25 per lot (of 10,000) traded. This gives the client a net effective spread of 4 1/4 pips.

Since Most of the forex business model is to offset all trades on the market and not take positions against the clients, this allows the Dealing Desk to know exactly what the financial exposure is at all times and exactly how much needs to be offset on the market.

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Written by admin on January 8th, 2007 with comments disabled.
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Disclaimer: Forex trading carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with currency Exchange trading.