How does plus500 make money? Many novice traders ask this question. However, the answer is easy.
When trading Forex, many people do not think about how brokers make money. However, this is a basic thing to grasp before making a deposit. As you should understand how money flows through their system, no one cares about your account more than you do, so keep that in mind when looking for someone to trust.
In this article, I will explain how plus500 makes money, and what role brokers play in the liquidity of the markets.
Understanding how plus500 makes money can help you choose whether you want trade with them or not. Most brokers take advantage of their clients through a variety of fees. Knowing these options will help you know where your money is going.
Plus 500 Review
- Low spreads
- Listed on AIM section of the London Stock Exchange
- Platform user-friendly
*Trading bonus are not eligible for clients registered under Trading Point of Financial Instruments Ltd and Trading Point of Financial Instruments UK Ltd
So how does plus500 make money?
Plus500 makes money from spread
Some Forex brokers will charge a commission for each transaction, while others will charge the spread between buy and sell prices.
Plus500 earns money mainly by keeping the spread or charging a fixed fee per transaction. Some brokers even charge for both, but this is becoming less common these days, as the commoditization of trading calls for competition for lower prices. Some unscrupulous Forex brokers say they offer commission-free trades, but they usually charge more on the spread to compensate.
Sometimes the spread is fixed, sometimes it is variable. In a variable spread liquidity pool, the amount of this spread will depend on the number of orders placed. In the case of major announcements, such as the number of non-agricultural jobs in the United States, the spread generally increases.
For this reason, in a volatile market, you may find yourself paying more in spread than expected. This is the main advantage of a fixed spread because at least you know what you will be charged to facilitate buying and selling.
Therefore, if you ask ” how does plus500 make money?” We will say that Plus500 offers a fixed spread. Generally, it is low in comparison to what is offered in the market. However, additional fees may apply in the following conditions:
How does plus500 make money from fees?
Plus500 charges traders fees in the following situations
An overnight funding amount is either added to or subtracted from your account when holding a position after a certain time (referred to as the “Overnight Funding Time”).
Currency Conversion Fee
Plus500 will charge a Currency Conversion Fee for all trades on instruments denominated in a currency different to the currency of your account.
The Currency Conversion Fee will be reflected in real-time into the unrealized profit and loss of an open position.
Guaranteed Stop Order
A stop-loss order is an order placed withplus500 to buy or sell once the market reaches a certain price. A stop-loss is designed to limit a trader’s loss on a forex position.
Therefore, when you place a stop loss to a certain price, you guarantee that your position closes at a specific requested rate. Consequently, it is subject to a wider spread.
Plus500 inactivity fee
Plus 500 charges $10 per month. This charge are applied if you didn’t log into your trading account for a period of at least three months. This fee will be charged once a month from that moment onwards, as long as no login is made to the account.
How scam brokers make money?
One of the worst ways that scam brokers make money is through taking your money without giving you access to the real market. In fact, you are granted access only to the internal servers of the broker. These servers imitate the real market, but they are not real.
Forex brokers, and everybody, know that up to 90% of traders lose money in the market. Therefore, instead of transferring your money to central banks- may be to be taken by market makers when you lose- they keep them in their pocket and they grant you access to the imitation market. When you lose, the broker keeps the money. It’s easy money right!
Up to our knowledge, Plus500 is a very safe and a trusted broker. It is rigorously controlled and abide by the ethics of the business.
Plus500 has received awards and recognition from industry watchers for its excellent service. It also has one of the highest-rated CFD apps on the App Store and Google Play.
In addition, Plus500 is regulated by FCA, which is the best ever regulation that a broker can get.
Indeed, how does plus500 make money?
Indeed, Plus500 makes money in two ways, from spread and additional fees in some situations. However, as far as the service is concerned, we think that plus500 deserves every dim you give to them. They are trustworthy, professionals, and have multiple regulations.