The aforementioned high volume and liquidity brought to high competition between trade vendors.
Intense competition lowered the spreads between selling and buying prices. These spreads, or margins, is the cost of the deals, and the profits of the trading agencies.
The cost is one of the lowest in the international financial markets, compared to the size of the deals. A well traded currency like the US dollar, Euro or the Japanese Yen, will have very low spreads, while less traded currencies, such as the South African Rand or the Hungarian Forint, will usually suffer from a higher spread.
For major currency pairs, the spread would be about 3 to 5 pips. It can sometimes be lower, but it’s impotant to notice the agreement with the trading agency: additional costs can be imposed in such cases.
These low spreads, fueled by the high competition, draw many people into Forex trading. These spreads are much lower than spreads that we usually meet when buying foreign currency – cash money.
Share
