New to Forex - Fees/Brokerage?

#1
I have been doing stock trading for almost a year now and I am thinking to dive into forex as well.

One thing which I have figured out by now is that forex trading isn't directly legal in India and I will have to go to loops to get it working.

So before I get into the loops, I would like to ask the members, what kind of fees are involved with the forex trading?

Example:

If I buy 1000 USD at say INR 50,000.
And then sell it for INR 50300.

How much fees can I expect to pay? Are there any kind of tax as well like we pay in stocks? Does the fees varies from company to company, if yes, which one if the cheapest?

Any kind of hint regarding the fees will be greatly appreciated.

Thank you,
Pankaj
 
#4
Hi pankajjain,

its a good thing you're planning to venture in forex, because the opportunities are endless and I congratulate you for the same.

Let me get at the basics: the currencies are traded in pairs. when you buying one, you re selling another and vice-versa. You've leverages and margins, wherein you can have leverages as high as 1:400. so with 500 bucks you can even trade upto 500*400= 200,000!!! but you will have to maintain your trading margins in your trading account, meaning which if the funds get lower than that you cant trade as well as your current positions also closes (which is normally about 1% for currencies).

the way you're charged is mainly by spreads/commissions. spreads is the difference between the ask & bid price (buy and sell price) so if the currenct rate for buying a eur/usd is 1.0123 and the sell price is 1.0120 (the spread is 3 pips) you'll be charged 3 pips every time you open a position or close it.

commissions are levied in form of %. always go for the ones that charge you low as is the common rule. but make sure m that the brokerage firm is reliable and doesn't charge you anything else than that. moreover, in many cases if the broker is charging you by means of spreads, they don't charge commissions. oalso, the ones who charge commissions (stp brokers, some ecn) have very tight spreads, and rarely fluctuate in during market volatility.

try opening demo accounts with various brokers and go for the one where the best rates are given, good analysis are provided, and are renowned and reliable.

hope this was of help. let me know if you need any further info. all the best for your journey in the world of forex.
 

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