Should Commissions Fees in Trading?

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Should Commissions Fees in Trading?

Investors who trade or trade stocks, futures or options usually use a broker, who acts as an agent in the deal. Brokers take orders to trade and try to execute them according to client or client’s instructions. To provide this service, the broker is paid a commission when a client or customer buys and sells tradable investment instruments.

The forex market does not have a commission. Unlike exchange-based markets, forex is a market with a set of partisans only. Forex companies are dealers, not brokers. This is an important distinction that all investors should understand. Unlike a broker, the dealer assumes market risk is to serve as a counterparty to the investor’s trading position. They do not charge commissions; Instead, they make money through spread (bid-ask difference).

In forex business, the investor can not place a purchase on the bid or sale price on the offer as in the exchange-based market. On the other hand, once the price already reflects the cost of the spread, there are no additional fees or commissions. Any one cent profit is a pure profit for investors. Nevertheless, the fact that traders should always be able to cope with bid / ask spreads makes scalping much more difficult on the FX.

From the above explanation, we find that in forex trading should have no commission in trading. Trading costs only from the size of the spread. However, in Indonesia, a futures broker as a legal company that may offer forex trading business, still charges commissions in trading. This is more due to regulations from Bappebti authority and / or futures broker consensus in Indonesia since the first. And indeed this commission is given back to their marketing or sales staff.

Currently, the client or investor of a futures broker can already make their own trading through online transactions. The online trading platform offered in general is Meta Trader 4. Every broker has a different MT4 platform. However, the commission is still charged to customers. This is more to the consensus of futures brokers who must charge commissions to their customers for each transaction per lot.

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