How much it costs to trade foreign currencies (MODUL 3-2)

Some firms charge a per trade commission, while other firms make their money on the spread between the bid and ask prices they give their customers. In the earlier example, the amount of the Euro spread is .0008 (the 1.2178 ask price minus the 1.2170 bid price). This means that if you bought (or sold) the Euro and immediately turned around and sold (or bought) it before the prices changed, you would have a $.0008 loss on each Euro, or an $80 loss on a 100,000 Euro transaction. The wider the spread, the more the price has to move before you break even.

While some forex firms advertise “commission free” trading, they are still making money from your trades through the bid/ask spread. Before opening a trading account, be sure you know how all the parties involved are being compensated.