Trading is often perceived as a liberal activity that does not require any fees. But this is not the case, because trading is above all a financial activity. Indeed, when you invest in financial products, you may be charged different types of fees. These have a significant impact on the final return on your investment. The amount of the fees varies depending on the products you deal in as well as your broker. Discover in this article the different fees you will face.
On Forex, fees are kept to a bare minimum. This is one of its main advantages. If you invest in this market, you will only have to pay the commission to the broker. The commission represents the difference in quotation between the purchase price and the sale price of a currency pair. The difference occurs on the fourth decimal of the quotation and is translated into pips. Depending on the chosen broker and the currency pair traded, the number of pips between two quotes (the spread) may vary. It is possible that it is fixed or variable. When fixed, the commission to be paid will always be equal to the same number of pips. On the other hand, when it is variable, you risk paying a high commission at certain times of the day. Note that the final commission cost will also depend on the number of units traded and leverage.
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Fees on Contracts for Difference CFDs
Regarding CFDs on indices, currencies and commodities, the fees you must first pay are also related to the spread. For share CFDs, there are no spread fees. But when buying or selling, you have to pay transaction fees. This sum corresponds to a percentage of the position value. It usually has a fixed minimum amount which varies depending on the country you are trading in. When trading intraday, additional fees will not be applied. Moreover, if you keep your position open for more than 24 hours, relover comes into play. And that, every day. The relover amount will depend on the type of CFD you are trading. For example, for the currency CFD, its amount will depend on the difference in lending rates between the central banks linked to each of the currencies that make up the pair.
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You may also pay fees related to the type of account you hold. If it is a PEA or a securities account, you are likely to be subject to custody fees and account maintenance fees. For life insurance, you may also be subject to different types of fees such as arbitration fees (they relate to the arbitration contract), management fees and payment fees. In addition, the amount of fees and their application will depend on the broker you choose to trade. It is for this reason that it is recommended to read the conditions of each of them carefully before deciding. It is also important to notify that depending on the account you have, the gains made may be subject to income tax, not to mention social security contributions.
Costs relating to the collective investment
This part is very important for you if you decide to invest in a collective investment such as SICAV, FCPI, etc. Indeed, you must pay entry fees and exit fees. The first are to be paid when you subscribe to the investment. As for the second, you will have to pay them in the event of redemption of your units. Apart from these costs, it is also possible that you pay a performance fee. In this case, the management company would have exceeded the return forecasts. Before investing, you should be sure to consider the impact of these charges on your final return.