Spread occurs in trading Forex. Spreads are often expressed in wide and narrow. Spreads is the difference between bid and sell, so the narrower the spread is, the closer the fee is to zero. For Forex traders, being able to trade with a narrow spread also leads to a reduction in commissions per transaction.
Beginners often deal in pairs such as yen or US dollar, which have relatively small spread openings, and spreads are also an important factor to reduce direct costs. However, in the case of domestic Forex, the spread is low, slippage is likely to occur, and it may be quite high when seen at the total cost.
In overseas Forex trading, there are not many places where the contract power is high and the slippage is zero. Even if the spread is a little wider, the total cost is lower, so there is merit in dealing overseas Forex. Even at overseas Forex companies, the spread varies by currency pair, so it is also important to compare. This time, I will compare the spread of the famous eToro as a unique overseas Forex company and GEMFOREX.
Spread of eToro is wide
GEMFOREX does not participate in the spread competition which is intensifying in recent years, and sticks to the quality of service rather than the spread.
Similarly eToro does not make appealing points of narrow spread. Even in the currency pair of the yen and the US dollar, which tends to be an indicator of the spread, it spreads to 2.0 yen and spreads widely. Given that the average spread of GEMFOREX is 1.5 or less, it is obvious that they are not focusing on spread competition.
In a highly stable currency with a spread of less than 2.0, many combinations of the euro and yen and the combination of euro and US dollar have a wide spread of 3.0 to 4.0. Of course, it is not always nice that the spread is narrow. But on average, it is a rather wide spread, so we cannot deny feeling unsuitable for trade like scalping.
As eToro has a wide spread, it is not possible to trade with leverage nearly 1000 times as much as GEMFOREX, but it is up to 400 times leverage trading. Thinking about doing Forex domestically, you can trade with high leverage, but it is not a point that can be appealed to the front as seen from overseas Forex companies.
Good or bad eToro is unique
By setting to a wide spread, Forex companies can efficiently collect fees from traders. The question is, instead of having a wide spread, is the focus of providing Forex services.
The fact that eToro distinguishes itself from other overseas Forex companies is that it is introducing social trade. Normally, traders themselves automatically buy and sell themselves by utilizing the system trade or the style of investing by reading the quotes. Automatic trading system, unlike traders actually doing operation, since you can do trade that do not contain emotions, it is a reassuring trading tool. However, because it is completely automatic trading, there are persistent disadvantages such as the oldness of the strategy and the fact that it cannot respond when the market price suddenly changes due to economic troubles.
Social trade refers to trades made by copying trades of others. Traders themselves are not reading trades and not doing trades themselves or trading leaving everything to the system. There is no gain even if copying an amateur trader and doing a deal, but if you make a deal by making a copy of a professional trader, the likelihood of winning will be higher as you can do the same trade as a pro. Unlike system trade, there are merits such as being able to deal with sudden market fluctuations as well as dealing with accidents.
In addition, eToro has a big benefit of cash backs and bonus. Even if the spread is high, if the money coming in from the campaign gets bigger, you can make big deals with less funds. In the appeal of narrow spread, since they cannot afford the money they need for bonuses and cash backs, they cannot do lavish treats.
Points to remember when doing Forex with eToro
eToro, that is performing in their own pace, is a good impression compared to the Forex company which is participating in low spread competition in Forex trading and collecting traders collectively. However, in order to do business with eToro, you have to open an account from a website that does not correspond to Japanese and apply for it. It is fatal if you are a beginner or a trader who cannot speak English.
Also, in the case of trading with 400 times level leverage, when the market fluctuates greatly, it often happens that the account declined at an amount lower than zero and the account becomes negative. Although it is one of the risks of borrowing in Forex, in overseas Forex companies it is spreading widely and mostly done by not making a contract from the negative amount than zero called zero cut.
eToro has a risk that an account will be negative if it does not adopt the zero cut system. However, this is also a part that is greatly different from other overseas Forex traders, so even if you do not zero cut it will not be subject to margin call. If you negotiate properly, your account will never fall below zero.
eToro, which is unique and attractive, also needs to be able to use trading tools in English in order to make good use of the service effectively. In GEMFOREX, margin call is unnecessary from the beginning because they adopt the support system zero cut system, so even those first time in using Forex has no problem. Although there is attraction in each Forex company, it is important that you choose where they are offering services considering the trader, and not those that only appeals by the narrowness of the spread in the end.