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Spreads and fees at ActivTrades at a glance
When comparing Forex brokers, there are several important features that you as a trader should pay attention to. In our reviews, which provide you with detailed information on numerous brokers, key data such as trading platform, customer service, training opportunities and, of course, trading conditions play a major role. Among the most important trading conditions, which also represent the main costs when trading foreign exchange and CFDs, are above all the spreads. A spread is the difference between the buying price to be paid by the trader and the selling price the broker is willing to pay. Typically, the spread ranges from 0.5 to over 20 pips, depending on the broker and currency pair.
The spread as a major cost factor
Especially new traders who have not yet traded currency pairs or CFDs need to first learn the basic concepts of Forex and CFD trading. In addition to margin, leverage and trading strategies, the spread is certainly one of these technical terms, the meaning of which is not immediately familiar to all traders. Therefore, we would like to explain briefly what Forex spreads are. As already mentioned, the spread is the difference between the buy and sell price. For the trader, the spread represents the main cost factor because he has to spend more money to buy a currency (always converted into Euro) than he would receive from the broker if the exchange rates were unchanged.
The higher the spread is, the higher the costs for the trader. Especially so-called day traders, who trade different positions several times a day, pay attention to the spread. The spread is usually measured and indicated in pips. A pip in turn denotes the smallest possible change that a currency rate can make. For many currency pairs, this is the third or fourth decimal place, such as the most commonly traded currency pair, the Euro and US Dollar.
As the following practical example shows, the spread for the leading currency pair, the Euro and US Dollar, is often 1 to 3 pips:
- Buying rate: 1.2501 dollars per euro
- Selling rate: 1.2504 dollars per euro
- Spread: three pips
- Transaction volume: 100,000 currency units
- Costs in the form of the spread: 30 Euro
As you can see from the example, the costs in the form of the spread are relatively low in relation to the trading equivalent, especially when the high transaction volume is included. However, you should note that for numerous transactions within a short period of time, the costs are naturally added up. Therefore, the choice of the broker is determined by the spread that the broker estimates.
Forex spreads with the broker ActivTrades
Now that you know what the spread is and what to look out for in terms of these costs, we will now look in detail at the Forex spreads quoted by the broker ActivTrades. At first glance, you can see that this broker also has spreads based on the currency pair to be traded. The broker works with so-called variable spreads, which means that he does not quote fixed spreads, but can change them depending on market events and situation. In principle, trading with ActivTrades is possible from as little as 0.50 pips, which mainly concerns the most frequently traded currency pairs.
In the following we would like to list some of the most important forex spreads and the average costs you have to expect from the broker ActivTrades:
- EUR / USD: 0.74 pips
- EUR / GBP: 0,90 pips
- EUR / CHF: 1.20 pips
- USD / CHF: 1.10 pips
Among the so-called majors, the most frequently traded currency pairs, the broker ActivTrades with its quoted spreads therefore cuts a very good figure, as these are set comparatively low. For somewhat exotic currency pairs, the spread is of course sometimes much higher, for example, the currency pair Euro and Norwegian Kroner at just under 28 pips and the currency pair Euro and Swedish Kroner at almost 27 pips.
Also interesting is a statistic that the broker publishes on his website, namely the respective average spreads of the past week.
This chart shows customers that the size of the spreads depends on the time of day when the trade is made. In most cases, spreads increase from 18:00 and peak around 22:00. It is therefore worthwhile in this case to trade at certain times, if such a margin is possible.
CFD spreads and stock commissions
Through the broker ActivTrades, not only currency pairs can be traded, but also commodities and shares, especially of course through the so-called CFDs. Of course, a fee is also incurred when trading these products, which also consists of the spread when trading with commodities. For example, if you want to trade oil CFDs, then the broker estimates a spread of usually 30 ticks (0.0030 points). You can also find detailed information about the individual spreads for the various commodities on the broker’s website.
When trading with shares, it is also the case with the broker ActivTrades that the spread is not estimated as a cost factor here, but instead the stock exchange commissions or commissions to be paid. For example, if the stock is to be traded on a German or Italian stock exchange, the broker ActivTrades charges a minimum commission of one euro, whereby the commission is otherwise 0.05 percent of the transaction value.
Trading on the Nasdaq, the American technology stock exchange, is even somewhat cheaper at 0.02 dollars per share and one dollar minimum commission.
Margin and maximum leverage as further trading conditions
Anyone who is informed about the spread and thus about the costs of trading is almost always interested in the amount of the required margin and the maximum leverage that the broker makes available. With ActivTrades it is so that both maximum leverage and margin depend in particular on the account type chosen and thus on the amount of the minimum deposit.
As a result, maximum leverage in Forex trading ranges from 1:100 to 1:400, while minimum margin consequently varies between 0.25 and 1.00 percent.
Conclusion on ActivTrades costs
As ActivTrades does not charge any additional commissions or order fees when trading currencies, the main cost factor to consider when trading Forex and Commodity CFDs is the spread. Clients benefit from moderate spreads in the range of a few pips, especially of course with the so-called majors. Here, for example, the EUR/USD can be traded from a spread of just 0.5 pips, which is a very good value, as no additional commission is due. Interesting is the chart published on the website of the broker about the average spreads depending on the trading time. This allows traders to see at what times the spreads are likely to be at their best on average. Only when trading stock CFDs, ActivTrades, like almost all other CFD brokers, charges a commission on the trade, but as this is a percentage of the value of the position traded and is not charged per order, ActivTrades is also of interest to traders who wish to start trading stock CFDs with smaller positions without the fees making the trade unprofitable.