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One of the main decision criteria for traders who basically want to choose between different brokers and for this purpose perform a Forex broker comparison is the costs incurred. Those who have decided to trade CFDs or currency pairs usually trade either through a Forex or CFD broker. IG Markets is one of these brokers and offer great conditions for traders on the platform. But what costs arise? You’ll find more info about this in the following.
These fees are charged
While online brokers, who primarily offer securities trading, essentially have two significant cost factors with the custody account fee and the order costs, forex and CFD brokers with their offer include slightly different costs, which should be taken into account when comparing. This is of course also true for the renowned Forex and CFD broker IG (formerly IG Markets). Here it is especially the spread and possible commissions that are the main box factors for the customer to consider. In the following, we would like to explain in more detail which spreads and commissions as well as possible further costs the customer will have to pay to the broker IG.
The following costs may arise while trading with IG Markets:
- Market spreads
- Trading commissions
- Overnight fees
- Inactivity fees
The spread as the main cost factor: What are the details?
If you are new to trading CFDs or Forex or have no experience in this area, you may want to ask yourself what the spread is. For both Forex and CFD brokers, the spread is the main cost factor, so it is a major factor in the decision of which broker many traders choose. The spread as such is relatively easy to explain, as it is nothing more than the difference between a buy and a selling price set by the broker. It should be noted that the broker always buys the foreign currency at a slightly different rate than he would sell the currency to the client.
Spreads at IG at a glance:
- FX spreads for IG from 0.8 pips
- Margin as of 0.5%.
- Commissions on Equity CFDs from 0.1%
- Margin on equities from 5% and above
- Flat fee of 10 Euro for EU stock trading
- 10 Euro fee for trading physical shares
As a result, the trader receives slightly less money converted into euros back than he had to spend when buying the foreign currency. This difference between the buying and selling rate is expressed in pips, where a pip is usually the smallest tradable decimal place by which a currency rate can change. For example, if the client can sell one euro from the broker at $1.1350 and gets $1.1347 back from the broker in return for the purchase, the spread would be three pips. Spreads between 1.5 and 3.0 pips are quite typical for many brokers, especially for the currency pair Euro and US dollar. At IG, trading in the EUR/USD begins at as low as 0.8 pips.
Basically, the spread is such that each broker can determine how high it is and for which currency pairs it applies. In practice, it usually turns out that the spreads for the main currency pairs, such as the euro and US dollar or euro and pound sterling, are smaller for most brokers than for somewhat more exotic currency pairs. Depending on the currency pair, spreads typically range from 1 to up to 20 pips. For this reason, brokers naturally have an advantage in terms of costs when they quote comparatively low spreads. As a trader, however, you should be aware that some brokers charge low spreads on the one hand, but then charge additional commissions for the trade on the other, which is particularly common with ECN or STP brokers. Therefore, these two cost factors should always be considered in combination, even though there are many brokers who the only charge spreads and no commission.
Here is an extract from the spreads at IG:
|Spreads with IG (Markets)|
|FTSE 100||CFD||1 Point|
|Australian 200||CFD||1 Point|
|Wall Street||CFD||1.8 Points|
|EUR/USD||CFD||ab 0.6 Pips|
|AUD/USD||CFD||ab 0.6 Pips|
|USD/JPY||CFD||ab 0.7 Pips|
|GBP/USD||CFD||ab 0.9 Pips|
|EUR/GBP||CFD||ab 0.9 Pips|
|EUR/JPY||CFD||ab 1.5 Pips|
|USD/CHF||CFD||ab 1.5 Pips|
Forex spreads of IG Markets
Broker IG’s spreads are also based primarily on the currency pair to be traded. Basically, all significant currency pairs, also called Major FX, are traded via the Broker. Trading as such starts as low as 0.8 pips, which is the price quoted when trading the currency pair Euro and US Dollar, for example.
For other currency pairs, such as the Euro and British Pound or British Pound and US Dollar, trading via the IG broker usually starts at one pip. However, you should be aware that the size of the spreads depends not only on the currency pair but also on other factors, as IG usually offers so-called variable spreads, which can change depending on the market situation.
Forex spreads with IG:
|Minimum Spread||ø Spread|
It should be noted that different spreads apply to MetaTrader accounts with IG than on the other platforms offered by the Broker. Usually, these are slightly higher.
FX spreads on MT4 accounts with IG:
|Currency pair||worth one pip||Min. spread||Ave. spread|
Commissions as another cost factor?
When trading CFDs and currency pairs with Broker IG, it is only the spread that should be considered as a cost factor. However, this only applies on the condition that the positions are closed out within one day. If, on the other hand, the respective trading position is held overnight, the financing costs must be considered as a further cost factor. In principle, the financing costs are interesting on the capital that the broker makes available to the trader in the form of leverage.
The interest rates that the broker charges for this money lending are usually based on key interest rates such as EURIBOR or other international interest rates. In particular, traders who buy and sell a lot and quickly rarely have to deal with the financing costs, as they are more likely to hold positions for more than one day in exceptional cases. However, for other traders who are more long-term oriented, the interest rate in the form of financing costs can be a cost factor to consider.
In addition to the already mentioned spread and the financing costs, there are commissions to consider when trading in equity CFDs, which are of course also possible via the Broker IG. Also here it is so that the commission calculated in detail depends on which stock CFDs the customers decide on. The share commissions start from 0.1 percent and therefore represent a not unimportant cost factor for the trader.
Costs for Stock CFD Trading with IG:
|Region||Provision per transaction||Min. fee (online)||Min. fee (by phone)|
In addition, IG also offers trading in physical shares via its trading platform. Of course, there are different fees here than for share CFD trading.
Fees for share trading with IG:
|Region||Provision per transaction||Min. fee (online)||Min. fee (by phone)|
In addition to the costs, especially in the form of the spread, but also in the case of equity CFDs in the form of commission, there are of course other trading conditions that are of interest when comparing providers. With most Forex and CFD brokers, there are no account management fees to consider, which is also true for IG. The use of the trading account is completely free of charge for all traders.
Unless the trader has not traded for more than 2 years and still has funds in the account. In this case, IG charges an inactivity fee of 14 Euros per month. Otherwise the broker IG can still offer a particularly customer-friendly condition. This consists of the fact that no minimum deposit on the trading account is required. The minimum margin with Broker IG is generally 0.5 percent, which leads to maximum leverage of 200:1. Whoever observes these trading conditions has already gained a good overview of the costs and other conditions that may be of interest when comparing brokers.
When trading at IG Markets, rollover costs arise for almost every trading instrument. However, the charges differ. One thing, however, has every fee in common: The basis is a formula. Please take a look:
What is a little tricky with this broker is, that there is also an admin fee charged on top of the overnight fee per annum. You’ll find all the Infos about the admin fee in the table below.
|Forex||0.3% (0.8% for mini contracts)|
|Spot metals||0.3% (0.8% for mini contracts)|
Conclusion on all costs and spreads
The most important cost factor, which also has to be taken into account with Broker IG, is the estimated spread. For the most common currency pairs, such as the euro and US dollar or Australian dollar and US dollar, the spreads start at the broker from as low as 0.8 pips.
On the other hand, anyone wishing to trade equity CFDs must pay a commission starting at 0.1 percent and also observe the minimum margin of 0.5 percent. It is also important to mention that the Broker IG usually estimates variable spreads and, in addition, the usual financing costs are incurred if a position is held over the day. All in all, the estimated costs at Broker IG can be described as low so that the broker can certainly score points against many other competitors in this area.
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