Brokerage Commissions and Forex Pip Spreads

Read this tip to make your life smarter, better, faster and wiser. LifeTips is the place to go when you need to know about Forex Spreads & Commissions and other Forex topics.

What are brokerage commissions from Forex spreads?

Brokerage Commissions and Forex Pip Spreads

Brokerage commissions are not direct volume-price commissions in forex. Instead, brokers often earn income by the pip spreads. The spread is a difference between bid/ask price. The brokerage commissions are not direct, but the broker earns income based on this difference. The pip is the fourth decimal place on a monetary unit. Smaller spreads mean more trader value and less broker earnings. Pips vary according to the currency pairs being traded. FX Club's current pips are:

3 pips: EUR/USD
4 pips: USD/CHF, USD/JPY, EUR/CHF, EUR/JPY,
5 pips: GBP/USD, EUR/GBP, USD/CAD, AUD/USD
6 pips: CHF/JPY
8 pips: GBP/JPY. GBP/CHF
12 pips: AUD/JPY, EUR/CAD
15 pips: GBP/CAD

The spread is usually only charged when you buy or sell, not when you buy and sell simultaneously. The pip spreads may not seem like much, but when the number of transactions and volumes of transactions are added up there can be a large difference in the trading cost.

   

Comments

Nobody has commented on this tip yet. Be the first.



Name:


URL: (optional)


Comment:


Not finding the advice and tips you need on this Forex Tip Site? Request a Tip Now!


Guru Spotlight
Kristle Jones