The Forex broker always earns whenever you trade.
If he takes no commission, then it’s the bid-ask-spread of every trade you take he makes money on.
When setting profit targets, you should regard the spread as cost of trading, which is reducing your profit potential.
Another cost factor is the swap you might have to pay, if you hold an open position overnight.
Depending on your lot size and the currency pair you trade, the swap or rollover-charge can be quite hefty.
Especially if you don’t close your positions on Wednesdays, because many brokers will then calculate the swap for three days.
This is because in the spot forex market, all trades are settled 2 business days from inception. And if you hold an open position over night, it will be rolled over to a new value date. Thus when you roll an open position from Wednesday to Thursday, then Monday next week becomes the value date, not Saturday. Therefore the rollover charge (swap) on a Wednesday evening will be three times the normal value.
What many Forex traders are not aware of is, that they can cut down their forex trading cost with rebates.
How do Forex trading rebates or trade rebates work?
Normally you don’t get them from your Froex Broker directly, but from a third party, the so called Introducing Broker.
The Introducing Broker “introduces” new clients to the Forex Broker – he brings him new business.
The Forex Broker pays the Introducing broker a commission for every new client.
And some Introducing Brokers give back some of their commission to the clients they have referred to the Forex Broker.
Mostly this is done by rebating your trades at the brokerage and giving back some pips value to you , the trader.
Some Introducing Brokers will do so by paying this rebates to your paypal account, other will put the rebates directly into your trading account.
To discover in detail how to cut your Forex trading cost with rebates, go here.
