Before trading you should also plan all costs related to the services provided by paid brokers. These services can be of various kinds and can concern the strictly operational side, as well as the side concerning the movements of money (withdrawals). To get started, you need a broker, so it is best to choose one that meets our needs, starting with the choice between binary options and CFDs.
In this article we will see which platforms have the lowest trading commissions and the best withdrawal conditions.
Whatever your choice, it should be noted that online brokers still offer much lower costs than those offered by banks and other asset management or brokerage companies such as traditional brokers.
CFD Commissions: the Spread
There are no commissions in online CFD trading. Contracts for Difference brokers take “their share” of the difference between long and short prices, technically called differentials or spreads. Therefore, it does not matter if the trader wins or loses, but how many positions he opens. The broker will automatically make a profit when the trader opens a position and this profit is calculated from the difference between the prices and the quantity of securities for which the position is opened.
In addition to the spread, a management cost is calculated called overnight, i.e. keeping the position open overnight. This is a negative premium (which you pay) for those who want to keep long positions, while positive (which you get) for those who want to keep short positions. During the weekend we calculate the nights of Friday, Saturday and Sunday for securities whose trading closes on these days and reopens on Monday.
Binary Options Fees
As far as trading with binary options is concerned, it’s a bit different. In fact, in this type of trading the commissions do not apply to the purchase, but to the profit. Since the profit of an option is derived from the loss of another trader, the commission is equal to the difference between what the losing trader wagered and how much the winning trader actually receives in profit. So, with a profit of 80%, if you bet 100 euros, you would get 180 euros. The difference between 200 and 180, or 20 euros will be the broker’s profit so the “commission”.
In addition to the technicalities used to define the money retained by the broker, there are also costs relating to the services for which it is explicitly requested. An example of such services is binary signals. These are automatically processed tips with a complex software that, by analyzing real-time charts and histories of all available assets, can identify some trades with a high probability of success, for precise hours and assets.
Another type of commission that brokers may charge is on how to withdraw. In this sense, the popular 24option broker offers such withdrawal commissions:
- Credit Card: 3.5%
- Skrill :2%
- Neteller: 3.5%
- Bank transfer: 25 euro
The minimum amount of withdrawal by bank transfer is 100 euros plus any charges provided by the banks.
As for the broker of CFD Plus500, there should be no commission on withdrawals, however it should be calculated (and noted somewhere not to forget!) a cost of $ 10 every three months in case of inactivity or inactivity of the platform for that period.