Account charges levied by a broker are a very important factor to consider especially when trend runs in the short term are of the order of 5-10 pips.
I have a GBP account using the NinjaTrader platform with FXCM who, to their credit, have separated their commission charges from spreads. Hence, spreads of the major currency pairs are now approximately 1 pip maximum. Nevertheless, there is still the pip cost of each transaction to be accounted for when calculating the profit/loss of a completed buy and sell, or sell and buy, transaction.
Roughly speaking the broker's round-trip (buying + selling) commission cost of a major pair is £6 for a 1 lot (100K units) stake. Hence, a 10 pip gross profit is 100 less £6 after having risked a stop loss of say 100 (10 pips).
But then the pip cost has to be accounted for. This is roughly 0.5 to 1 so a 1 lot stake on, say USD/JPY, reduces the gross profit to £50 (pip cost=0.5) less £6, or a 1 lot stake on, say EURGBP, keeps the gross profit at £100 (pip cost=1) less £6. Clearly, EURGBP stakes offer the most profit potential but EURGBP is not a particularly volatile currency pair and, since most of the major currency pairs have a pip cost of 0.5 to 0.65, stakes in other pairs can halve one's perceived profit. On the plus side though, actual losses are less than the perceived losses so there can be some cancelling out in an account but overall a good trader should have less losses than wins.
Does any other trader have a comparative comment to make on their broker's costs or are there better services elsewhere? The pip cost I experience seems to be a "glossed-over" cost. It is stated to be an exchange rate adjustment but to me it is effectively a charge.
I have a GBP account using the NinjaTrader platform with FXCM who, to their credit, have separated their commission charges from spreads. Hence, spreads of the major currency pairs are now approximately 1 pip maximum. Nevertheless, there is still the pip cost of each transaction to be accounted for when calculating the profit/loss of a completed buy and sell, or sell and buy, transaction.
Roughly speaking the broker's round-trip (buying + selling) commission cost of a major pair is £6 for a 1 lot (100K units) stake. Hence, a 10 pip gross profit is 100 less £6 after having risked a stop loss of say 100 (10 pips).
But then the pip cost has to be accounted for. This is roughly 0.5 to 1 so a 1 lot stake on, say USD/JPY, reduces the gross profit to £50 (pip cost=0.5) less £6, or a 1 lot stake on, say EURGBP, keeps the gross profit at £100 (pip cost=1) less £6. Clearly, EURGBP stakes offer the most profit potential but EURGBP is not a particularly volatile currency pair and, since most of the major currency pairs have a pip cost of 0.5 to 0.65, stakes in other pairs can halve one's perceived profit. On the plus side though, actual losses are less than the perceived losses so there can be some cancelling out in an account but overall a good trader should have less losses than wins.
Does any other trader have a comparative comment to make on their broker's costs or are there better services elsewhere? The pip cost I experience seems to be a "glossed-over" cost. It is stated to be an exchange rate adjustment but to me it is effectively a charge.
