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It’s not a secret that it’s possible to make money trading Forex in Nigeria. There are many stories of successful traders who have achieved outstanding results. If you don’t want to make trading your main business and consider it as an additional source of income, it’s fine too. But whatever you decide, when getting started,read more...
Nigerian naira (NGN) is the official currency of the Federal Republic of Nigeria. The Nigerian naira is managed by the Central Bank of Nigeria. It distributes and attempts to maintain price stability with it. One naira is subdivided into 100 kobos. As of March 2021, 1 U.S. dollar is equal to around 380 NGN, soread more...
Bitcoin has been trading sideways for the entire month now. The BTC/USD pair has made 2 unsuccessful attempts to break through the bearish level of $ 40,000 and 3 failed attempts to break through the bullish $ 30,000. While bitcoin is stagnant, traders have switched their attention to altcoins. After the BTC rate began toread more...
Nowadays the completion among brokers is extremely high. It is when every broker is fighting for attracting new clients and keeping existing clients loyal to the brand. Brokers literally shower clients with the super beneficial offers: starting from appealing tight spreads along with bonuses and till competitions and prizes. Such a variety makes the process of choosing the broker quite tough, mostly for the beginners.
In this article we will help to realize how the spreads and trading commissions work. We will discuss if it is reasonable to consider them as a main orienting point.
Spread and commissions the first and foremost depend on the price received by the broker from its liquidity provider. Then the broker adds its own profit to the price as a certain number of points and translates the final value of spread/ commission to the terminal, where clients actually trade.
Moreover, spreads usually are non-constant. As a rule, brokers state that spreads are lower on trading accounts with floating spreads. However, the declared values of spreads appear quite rarely in real trading environment. Widening of spreads happens permanently and has different reasons: high market volatility, high demand on the market, releases of important macroeconomic news, etc. It happens sometimes even on fixed spread accounts (though the declared fixed spread initially is higher than the floating).
There are cases when a broker widens spread on all trades of certain clients based on the agreement with the partner, who referred those clients. If a broker is regulated, it has to inform the clients about the change of spreads. And the clients has to sign the written consent for the special terms.
To summarize, spreads and commissions are affected by many factors. Most of them depend on a broker. But spreads should be literally the latest argument for any trader while choosing the broker.
You will ask: But why? We know that too high spreads/ commisisons will either take away the big part of profits or pull an account to bigger «minus».
And now it is time to remember about popular word – cashback, that is very common in Forex industry. Forex Cashback is rebate (or return) of a part of paid spread/ commission. Forex rebate is received by the trader regardless of the financial result of a trade – was it in profit or in loss. Actually, a trader pays spread or commission regardless of the financial result as well.
Hence, a trader should focus above all on other, more important conditions, such as leverage, payment methods and speed of payments, reputation, licenses, egulations, etc. Meanwhile, there are two ways to return an excessively paid spread.
Some brokers offer such products themselves: return of the spread, or rebate, or cashback. Sometimes they do not advertise it, however, you can find it on the website or ask the details from the support team.
And the second way, which is actually more convenient and efficient, is to use different cashback services. Those services usually are aggregators which partner with broker companies worldwide. Those websites promote many forex brokers and show the amount of cashback which is possible to get from trades at each company they present. The most important tip is to register a trading account at a broker using the link from the cashback service website. Among representatives of such services is Globe Gain that has been successfully working on the market since 2011.
One more advantage of getting rebates from the cashback service rather than directly from the broker is an opportunity to trade simultaneously in different forex companies and receive centralized cashback from the one platform.
Cashback services quite often run various promos and increase initial cashback. That helps to keep their clients loyalty.
So, never forget to receive your merited forex rebate!