Plus500 fees like any forex broker can be categories into three areas:
The analysis below examines these four areas and key strengths and weaknesses of forex trading with Plus500.
Spreads for Plus500 are not fixed. This mean the difference between the buy and sell price of any currency pairing will variate during the day based on market factors. To provide an idea of spreads we have looked at the major pairings on the 13/10/2016 for a snapshot in time.
The spread for the Australian to American dollar is $0.95 per unit also know as 0.03%.
At the time of this Plus500 fees analysis, the exact spread was 1.9pips
The Euro to Australian Dollar has a spread per unit of $2.20 (the same percentage as the AUD/USD).
The spread on the 13th of October was 4.4 pips for this currency pairing.
The British Pound to Australian dollar has a lower spread percentage of 0.02% compared to the two currency pairings above.
The spread per unit is AU$0.64 and at the time of this review the actual live spread was 3.2pips.
The overall spreads are not the lowest in the industry with several ECN forex brokers offering lower rates as you can view on the forex trading comparison table. There are though reasons for his been the case which are explained in the next section.
Plus500 has no commissions on any of their trades. If your new to the concept of commissions, below explains this concept.
Why Do Some Forex Brokers Charge Commissions?
The main way a forex broker makes money is similar to a currency exchange business at an airport with a different rate charged to buy back the currency or sell the currency to an individual. The difference between these rates is know as the spread. The issue though with a spread is that unless they are fixed (which Easy Forex Offers) they can widen and shorten every hour and day. This makes trading costs inconsistent which can difficult for frequent traders working on systems.
To minimise spreads and make trading costs more consistent when forex trading, commissions were introduced. By having a set percentage fee based on volume the spreads can be reduced and in some rare circumstances can even be 0 pips. It is debatable if commission brokers result in lower overall fees so traders choose a mix of options based on their trading styles.
There are two additional fees Plus500 charge when forex trading.
When traders hold positions over an hour (which is indicated within the forex platform ‘instrument detail section’) a premium fee is applied. This covers the funding costs associated with the leverage (1:294) Plus 500 offers. The time of market close is also shown within the forex platform within the details page to provide greater transparency.
A premium is three times higher if held over the weekend. This means a position is opened on a Friday (or earlier) and not closed until the following Monday or later. It’s critical therefore to ensure when forex trading position are closed or the fees are known when choosing to hold a position.
2) Inactivity Fee
A $10USD fee is charged to traders who don’t trade for a predefined period as stated on the Plus500 user agreement. Such inactivity fees are common when currency trading due to the costs of the forex platform and other technologies used.
Other Plus500 Components To Know
Plus500 is a global forex trader and listed in London under the code Plus.L with a market cap of approx $750 million USD. While this Plus500 fee review focuses on forex trading, there are also other trading options including:
20 different markets can be traded ranging from the UK, USA to Germany. Traders can utilise leverage through Contracts For Difference (CFDs) with no commission charged on any trades. Australian shares can be traded go short or go long. With leverage, small deposits can help achieve the impact or larger volumes amplifying gains or losses. For this reason, Plus500 allows share traders to pre-define profit/loss positions to close positions once reached.
Major indices such as the NASDAQ 100 FTSE 100, S&P 500 and DAX 30 can be traded. Leverage of up to 1:294 can be applied to these indices due to their historic low movement levels on a daily basis. Trading on these indices can be done real-time and opening an account and position can be done in minutes.
Gold, Silver and even oil can be traded from $100 AUD. Leverage on commodities is slightly lower than other markets at 1:151.
Exchange-traded funds with advantage trading tools market trading EFTs through contracts for difference a popular option. 1:100 leverage is made available which means for example, $200 could mean an exposure of up to $20,000.
Plus500 provides traders the ability to call or put option CFDs on AEX 25, CAC 40 Dax 30, S&P500 or MIB 40. This provides the ability to hedge major indices and be impacted by rising, side-wards or falling market. Advanced charting options help inform traders of trends and the latest movements within the market.
Plus500 Fees Conclusion
Forex trading costs vary dramatically by the forex broker chosen. Plus500 fees stack up quite well and as explained earlier, their higher fees are offset by there ‘no commission policy’. There are other Plus500 fees such as holding positions and inactivity fees but these are aligned to industry standards. While fees are critical, it’s also important to make sure the leverage, forex platform and customer service suit your trading requirements. Read our full Plus500 review for more details on these areas.