here is the sample calculation from the IB page: "USD 50,000 daily volume for EUR = USD 2.50" So to extrapolate that to $1M traded (for under $1B monthly size, it gets better if you trade a lot) IF $50,000 traded = $2.50 commish one way IF $50,000 x 20 = $1M traded THEN $2.50 commish x 20 = $50 one way THEN $50 x 2 for R/Trip = $100 So yes, I was off by $20 per R/T or $10 per side - my point is still valid, this is still 1/2 cost of fixed spreads even at 1 Pip and it is a lot less than your typical 2 - 3 pip spreads on majors. Any problems with this? Correct me if I am wrong, I am open-minded about it.
If you trade 1 mio. eur/usd, $20 is still not right, but anyways.. Please explain how you pay 2 pips per trade as "commission" with a 1-pip fixed spread like in your example. Thanks.
Actually, it is $20 per side per $1M. See the IB commish page. It states that the rate is 0.2 of a pip - so therefore the prior posted example by our other member is right. It costs $40 to open & close $1M. a pip = 0.0001 therefore 2/10th of a pip = 0.00002 x $1,000,000 = $20 --------------------------------------- I did not say that you pay "commission" on fixed spread. Rather the true cost of the trade is 1 Pip in and 1 Pip out. When you open a trade, you are down one pip that the market has to move for you to get to breakeven. When you close a trade, the market has to go 1 pip farther to fill your order at your specified price to clear the spread. Look at it this way: in order to make 10 pips, the market has to move 12 in your favor because you lose one pip on the open and one on the close. It is a function of only being able to open a long trade at the ask and only close it at the bid. Or open a short trade at the bid and close it at the ask. Is this right? Again, I remain openminded to any explanation of how this is wrong. I am not perfect. Tell me if I am missing the boat.
Not I think, rather the math proves. But you are welcome to keep overpaying for your trading. Matters to me not at all.
I hate to bring it up but there is a lot more to broker selection than simple spreads. I care about number of currency pairs offered first and foremost. Second is available leverage and at what level(GFT has 400:1 up to $10,000 account value if I am not mistaken). Third is general reputation, firm stability (financial and technical) and other things/intangibles. Whether EUR/USD is 2 pips or 3 pips matters little to me. I am not a scalper or a day trader.
Don't worry, you missed the sarcasm of the 'You think...' remark So I'm happy paying what I pay, you're happy with me paying what I pay, hey we're both happy! lol, I love this place but I've had too much entertainment for one day
Actually, now that I think about it, this only holds true assuming that on the ECN you can buy a long trade at the bid and sell it/close at the ask, right?