I'm thinking since spread and commission are added so that broker can make money from traders, it means it is potentially possible to trade with way less overhead.
So can broker themselves trade? What would be their overhead then?
Does prop trading firm and financial institution trade with way less overhead? How much?
What is the lowest possible overhead a retail investor can get (without being scammed)?
Hi Hugh
I only know about retail FX trading - not from the commercial side - but maybe your question is a bit like asking - "How long is a piece of string ? ".
For example if you are going to deposit a larger amount of money with a broker and then going to carry on doing business with him - you expect to negotiate.
When you go into Sainsbury's or Tesco for your weekly shopping - you except the prices and either pay them or shop elsewhere.
However when you invest money in a large Capital Item like a House or Car - you should never except the asking price - you negotiate and do the best deal you can.
So therefore if you deposit $1 k or 5 k with a broker and then just trade 5 or even 10 times a month - do you think you should get the same terms as another retail trader who deposits say $50k or even $100k and will be trading 150 -250 times a month at a good lot size ??
Basic spreads on the EU might be as low as 0 or 0 2 of a pip and then commissions added all depending on size and the amount of business you will be placing through your broker. If the broker only see making say $10 or $25 dollars a month from you - then I am sure basic rates apply - however if you start paying him $1000 or $2500+ a month - then expect to be able to negotiate ( you are in the driving seat etc ) but still you would maybe not get the same terms as some other commercial fund who's numbers might be 10+ time larger.
Not all Broker advertise these types of deals - and like anything there are other factors that are important that might override pure cheapest cost etc etc
Hope this helps for a start and i am sure you will hear from other members all the best deals and rates they have been offered
GL
Regards
F
