Saving your Forex trading costs
The forex market is by far the biggest market in the world with its immense turnover of above 4 trillions of US dollars. Everybody wants to participate, mainly because it is easy to access, small amounts are required to start and it is 24/7. However, it is very risky market and you should not dive into it before knowing the risks. It is leveraged trading meaning that you’re betting a fraction of the cost required to open the real position. In this case if you guess the direction the gain will be massive, like several times your initial investment. Conversely, if you don’t guess the direction you will lose the same amount of times your investments. Many traders end up with wiped-out accounts even for few minutes. So how to avoid that?
Save trading costs
Apart from playing safely, meaning not to risk too much, you should think about saving your trading costs. One of the things you should consider is choosing a forex broker offering tight spreads and low commissions for trade execution. Also, you can additionally reduce your costs by participating in a forex rebate program. Here is a good explanation of how forex rebates work. Basically, you trade as you normally do but for each trade you get a fixed amount of pips back to your account. Here is an example:
Suppose you decide to trade EUR/USD and your spread is fixed 2 pips. Buy 1 lot and sell 1 lot after a movement of 4 pips in your direction. You’ve just earned 2 pips! However, there could have been more if you participated in a forex rebates program. If with this broker the rebate rates is say 0.6 pips, you will earn total 2.6 pips. If we look from another point of view, this would be like you are trading on 1.4 pips fixed spread, because 2 minus 0.6 equals 1.4.
Another thing you can do is to choose a broker offering a good bonus program. Almost all forex bonuses have hidden rules that actually are against you. Choosing the right forex bonus is not an easy task. However, they all have almost initial conditions – trading volume will help you to earn more. So if you choose a bonus that gives you say around 0.5 pips per trade that would be additional reducing of your costs. You can combine it with rebates as well to achieve maximum result.
Whatever you do, be very aware to not get fooled by FREE offers. There is no free lunch at all. If somebody offers you something free there is always something hidden. Hence you should be 100% sure of the conditions you are signing. After you have considered these factors you should be ready to earn.
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