Commission – What is a Commission in forex trading ?

What is a Commission?

Definition of Commission: It can be explained as a transaction charges which a broker charges. Generally, there are three types of commission utilized by the brokers while doing Forex trading. Some of the trading firms provide a permanent spread whereas there are some that provide an uneven spread and still there are some that charge a commission depending on some amount of the spread. Instinctively, one may feel that the permanent spread broker is the perfect choice as then one would realize what things should be expected. As far as a Forex broker offering a variable speed is concerned, one can suppose a spread that at certain times will be as few as 1.5 or will be high as 5 pips mainly depending on the pair of currency which is traded at present and the intensity of volatility of the market. The effectiveness of a broker mainly depends on the total transaction he does with the bank. Generally the Forex brokers having high volume are referred as narrower spreads. For finding the best deal, select a trustworthy broker who owns huge capitals and has a strong relationship with the Forex banks. You should also check the differences among the famous currencies. Most often, it will be as few as 1.5. If it is the case, an uneven spread may be beneficial and prove to be much cheaper compared to the fixed spread. One of the cheapest ways for trading is to trade with a reputable dealer, market maker or dealer who can offer the liquidity that one needs to trade properly.