The classic mistake of a novice trader is the absence of a clear-cut action plan for at least the next month. Replenishing the deposit, the trader does not suspect what his potential expenses may be except the deposit and the Forex commission itself. The rule of a successful investor is: the more investments, the more salary can be extracted from them. And Forex is no exception. The more money invested in it, the greater the likelihood of success.
Mandatory and Optional Forex Commissions
The first item of expenditure of a trader before the start of trade is technical equipment. The appropriate configuration of the system unit, multiple monitors, etc. – all this should be included in the novice trader’s plan. A simple laptop is only enough for intraday trading on 1-2 assets, but not for multitasking strategies.
The second item of expenditure – broker commission. They can be divided into mandatory (they can not be avoided, but can be minimized) and optional, depending on the desire of the trader to make additional investments.
Mandatory fees include:
- spread. Floating or fixed. It represents the difference between the purchase and sale rate of an asset in which the broker’s profit is incorporated. The floating spread depends on the liquidity of the asset – it is less for liquid pairs, more for exotic ones;
- Forex broker commission. There are ECN accounts, is fixed or relative, is tied to the volume of transactions. Its amount is rather symbolic, but you need to take it into account;
- swap. Forex Commission for the transfer of an open position the next day. “Eats” a large enough amount of profit, therefore it should be taken into account in the medium and long-term strategy at the time of setting the closing horizon;
- withdrawal fee. This commission at Forex brokers is rare, but is often charged by binary options brokers;
- fee for the lack of activity. If the deposit is replenished, but there was not a single transaction in the account during the month, some brokers take a commission.
The trading conditions of some brokers on the contrary allow you to earn on the deposit. On the balance of the account interest is charged. True, to get it and withdraw, you must fulfill the conditions for the number of “traded” lots. You can reduce the cost of the spread by connecting to the compensation program of the rebate service.
Optional commissions include:
- purchase of a license for the trading platform. Professionals invest in the license, preferring to be safe from possible intervention in the terminal by the broker;
- Investing in paid seminars, courses and other training. Given the hassle-free access to free materials, few traders have this item of expenditure;
- Purchase of trading advisors and signals. Free counterparts can be used except as a learning experience on a test account. There are no effective free trading advisors. Also on a fee basis, you can order the development of an adviser on an individual strategy;
- Forex commission managers PAMM-accounts or commissions in social trading;
- promotion of your own blog to attract investors or promotion of referral partnership.
Do not forget to calculate the potential costs of Forex commissions and related expenses before trading. Most of the costs are investments in trade efficiency, but how much they need to be done is up to you.