What are commissions for currency transactions on Loan and Credit and how do they work? Some business costs are incurred.
Rental, marketing, administrative costs. In trading activities, commissions are transaction costs. We pay them to the broker and in this way the broker earns money.
How does a broker make money?
All the factors listed above are intended to show the potential of the Loan and Credit industry especially in the near future. The future growth of the industry is exponential from the point of view of the two factors that are most conducive to this growth: human nature (desire to earn money as quickly as possible and with the least effort, without your own boss, make your own decision) and the future development of the Internet. The internet has allowed brokers to connect traders with a liquid interbank market. This is what a brokerage house does, and it’s a source of income, or at least part of it. As explained in other articles, depending on how you organize your business, the Loan and Credit broker has several sources of revenue:
❐ Spreads . They represent the difference between the buying and selling prices. In addition, they can be different for each currency pair.
❐ Transactions . If the broker is organized as a market maker, it will effectively create a market for its clients and will trade in the opposite direction to the client. The probability of success is 80% in favor of the broker.
❐ Commissions . The broker charges a commission for each transaction. However, there are a few things you should know about commissions in the Loan and Credit market.
The main of transaction costs – Commission and Spread
Spread is the difference between the buy and sell prices. If you open a trading platform, you’ll notice that there is a difference in price at which you can buy and sell an item. This difference is spread.
An example would be EUR / PLN 4,3889 – 4,3928. The difference in these prices is the spread.
You pay the spread only once for a round trip, i.e. you pay it only once for a completed purchase and sale transaction.
❐ Note : Spreads can vary significantly depending on the currency pair and when you trade. Major pairs that are the subject of intense trading will have the least spreads. More exotic couples have much larger spreads.
It can often be seen that when there is a serious press release or market turmoil, spreads increase significantly.