Table of contents:
Overview spreads & fees at BDSwiss
Costs incurred during trading are certainly one of the most important criteria for most traders to compare. It is certainly right to take care to avoid unnecessary costs when trading CFDs, forex or binary options. On the other hand, however, compared to trading in securities, which is done through banks or online brokers, especially when trading currency pairs, CFDs and binary options, there are significantly lower costs. Therefore, it doesn’t really matter whether the broker calculates a spread of 1.5 pips or 2.0 pips for the currency pair Euro and US Dollar, for example. However, if you are trading very high volumes, even such a small difference can have a more significant effect on the total cost. That’s why the following guide provides a lot of information about the costs involved in trading CFDs, currency pairs and Binary Options. Furthermore, we will of course go into detail about the costs at Broker BDSwiss that you should be aware of when trading binary options, CFDs or foreign exchange.
The costs of trading with currency pairs and CFDs
If it is basically a question of the costs incurred when trading via a broker, it is first of all useful to ask about the type of product traded. For example, trading in securities incurs slightly different costs than trading in CFDs, binary options or currency pairs. First of all, we would like to deal with the costs that are usually incurred when trading CFDs and Forex trading.
There are usually no direct fees when trading binary options. In this case, the broker simply pockets the difference between the yield (for example 80%) and the investment sum as a fee in case of a profit. For an investment of 100 Euro and a return of 80%, the broker’s fee for this option is 20 Euro. BDSwiss is no exception. With Forex trading, the situation is somewhat different again.
In summary, BDSwiss Forex trading involves the following fees that must be observed:
- Financing costs (rollover)
- Commissions / commissions (for example when trading CFDs)
- Costs of payment methods
Usually, a Forex or CFD broker will quote a maximum of these four cost types. There is a main cost factor with the spread, which is estimated in this or similar form by all brokers who offer trading in CFDs or currency pairs. Only some brokers replace the spread with commissions or charge the customer a kind of fee mix. This mix would then result from the spreads on the one hand and the estimated commissions on the other.
As already mentioned, in practice, the spreads that brokers quote are quite different. Some brokers allow trading from as little as 0.0 pips, and these are usually so-called ECN brokers. But the other extreme is also present on the market, namely those Forex and CFD brokers who, for example, estimate a relatively high spread of 4.0 pips for the currency pair Euro / US dollar. From this point of view, the broker BDSwiss is comparatively cheap, because the lowest spread is only 1.2 pips.
In addition to the spread, there are other costs involved in trading currency pairs and CFDs, but these do not occur in every situation. This means, for example, the so-called rollover fee, which is a financing cost. These costs are only incurred if you keep a position open beyond the day. Fees for deposits and withdrawals are anyway very dependent on the Forex broker, so that an individual comparison is useful here. This also applies to commissions, which are charged by some brokers for trading CFDs, especially stock CFDs.
Costs when trading binary options
While there are some costs involved in trading currency pairs and CFDs, this section is all the shorter when trading binary options. In principle, there are no direct costs to consider with almost all brokers who offer trading in binary options. Only the fact that – apart from high-yield trading – the achievable yield is always slightly below 100 percent means that the difference between 100 percent and the achievable yield can be considered a cost factor in a certain way.
For example, the maximum return that can be achieved with BDSwiss in the range of normal high/low options is 89%. If the option ends in profit, the 11% are the fees that BDSwiss charges in this case. Since there is not an 89% return on every trade, but only 69% will be paid out in the event of a profit, depending on the option, the fees here vary depending on the option type and expiration time. However, direct costs, such as trading fees, commissions or even spreads, are not usually incurred when trading binary options.
The costs with the broker BDSwiss: spreads, rollovers and commissions for Forex trading
At the broker BDSwiss you will find the three main cost factors mentioned above when trading CFDs and currency pairs, namely
At this point we would like to start with the spreads that the broker BDSwiss estimates, especially of course when trading currency pairs. In order to provide you with a little more information and to give you a feeling for the spreads you can expect, we have listed below the spreads of some selected currency pairs:
- Australian dollar / Canadian dollar: 2.2 pips
- Australian dollar / Japanese yen: 1.6 pips
- Euro / Norwegian kroner: 26.7 pips
- Euro / US dollar: 1.3 pips
- British pound / Canadian dollar: 2.8 pips
According to the broker, trading is possible from 1.2 pips in the best case. The broker works with variable spreads, so that the difference between the buy and sell price can change several times a day.
Commissions as a further cost factor
In addition to the spreads explained above, there is a further cost factor that is referred to as commission, provided that you wish to trade CFDs with the broker BDSwiss. However, you only need to allow for this commission if you decide to trade stock CFDs. In this case, the Broker charges a commission of exactly 0.1 percent, which of course is based on the equivalent value traded. For example, if you want to trade stock CFDs with a value of 2,000 Euros, this would result in a commission fee of only two Euros.
Rollover: Financing costs with the broker BDSwiss
Another typical fee, which is also charged by the broker BDSwiss, is related to the rollover, i.e. the transfer of a position to the next day. Specifically, financing costs are charged for such positions that the trader still has in his trading account as “open” after 9:00 pm. The amount of the costs charged by the broker BDSwiss differs according to the underlying asset the trader holds. Of course, the direction of the investment also determines whether the trading account is debited with the fee or you receive a credit. Typically, you can expect a credit for a short position, while a long position will result in fees being debited from your trading account. However, this rule has recently been reversed somewhat due to the low interest rate situation.
Here is an excerpt from the Forex Swaps at BDSwiss:
We would like to use the following example to illustrate in detail how a calculation of the fees incurred can look like:
- Long position: Euro / US dollar currency pair
- Short position: Euro / US Dollar (buy Euro, sell Dollar)
- Interest rate for the euro: 0.7 percent
- US dollar interest rate: 0.4 percent
- Difference: 0.30 percent (per year)
In this example you have both a short and a long position, which are offset with the corresponding interest rate. This means that you have first sold the euro and bought US dollars, and then carried out the exact opposite transaction. Since you held both positions overnight, a rollover is performed. Based on the calculated difference of 0.30 percent, a traded volume of 100,000 US dollars, for example, would result in a rollover fee of 0.82 euros, since the 0.30 percent, as mentioned, naturally refers to one year. In this case, you will even receive these financing costs as a credit to your trading account. This sample calculation shows you how low the costs in the form of rollover fees normally are when trading CFDs or currency pairs. For example, if you trade a volume of 100,000 Euros and only invest 250 Euros of your own capital with a leverage of 400:1, the rollover fee of less than one Euro will of course have practically no effect on a profit of 400 Euros. This applies to both credits and debits with the financing costs.
Conclusion on the costs at the broker BDSwiss
The broker BDSwiss offers trading in CFDs and currency pairs as well as binary options. In the respective section we find the typical cost factors as they occur with many brokers. First and foremost is the spread, which is a significant cost factor when trading currency pairs and some CFDs. The broker also charges rollover fees, which are either charged or credited to the trading account. In addition, there is a small commission of 0.1 percent when trading equity CFDs. If you make a withdrawal from your trading account by bank transfer and the amount is less than 100 Euros, you will have to calculate an additional fee of 25 Euros per withdrawal. In the best case, you can trade from as little as 1.2 pips with Forex trading, although the size of the spread naturally depends on the currency pair.