I'm a Newbie and need some help understanding this futures vs forex question that keeps coming up. I'm reading on these forex sites about how trading forex is better because there's no commission, but the way I understand Spread is that a spread of 3 pips is like $30, which is a lot more than the average commission rate. If every trade on a forex market cost the trader $30 or more, why would anyone want to trade forex? Thanks.
Thanks, I know this is more of a futures forum, but I've been trying to find an answer to that question for a while now. I've been researching Forex a lot, am very interested in it, but I've never really found a satisfactory answer to the question of why a trader would pay the crazy spread that forex brokers want.
The spread varies depending on the broker. For example, the spread of 3 pips if you were using a standard lot does come close to $30 but using standard lots means that if you make 10 pips, you make $100.
If you were trading mini lots, your 3 pip spread equals $3 and if you were trading micro lots, your 3 pips spread equals $0.30.
You can do research for spread definitions and trust me, they should not worry you.