Forex trading exchange rates vary from one bank to the other due to operation policies and regulations. While banks are required by regulating bodies to have or display the same exchange rates obtainable in the forex market, there are little differences in the forex trading exchange rates according to banks. It should however be borne in mind that the forex exchange rates comes in pairs and these pairs are the most important determining factors of the little differences in the forex trading exchange rates according to banks.
FACTORS THAT BRING ABOUT DIFFERENCES IN THE FOREX TRADING RATES ACCORDING TO BANKS
1. COMMISSION AND LEVERAGES
The commissions charged by the banks vary from region to region and are also largely formulated by policies. While some banks may not charge some extra fee as commission others tend to include the extra amount in their exchange rate hence the need for a difference.
2. LOCATION OF THE BANK
One of the other factors which determine the forex trading exchange rates according to banks is the location of the bank. If the bank is located in place where they have little or no competition, they tend to charge more on forex exchange rates since they are the major controllers of the market. The location of the bank also determines how much they charge before selling the currencies to an interested trader. It should however be noted that some of the banks sell this currency in order to make profits.
3. THE AVAILABILITY OF THE CURRENCY
The next factor which determines the forex trading exchange rates according to banks is the availability of the currency in question. Some of the banks charge an extra fee as commission when selling or trading in currencies that their region is not too familiar in.
HOW TO CHOOSE THE BEST BANK
Choosing the best bank in terms of exchange rates can be a thing of worry for forex traders and brokers. Here is a step by step approach on how to choose the bank with the best exchange rate for your business.
1. HAVE A LOOK AT THE BANK’S EXCHANGE RATE TABLE
In forex trading, information is king. The very first step to identifying the bank with the best exchange rate is to obtain a copy of the bank’s exchange rate either from their site or from the marketing or customer care department of the bank.
2. COMPARE THE EXCHANGE RATES
It should be noted that some of the banks tend to have an exchange rate which is stable, unlike the forex market. In this case, you can go round the banks and have a look at their exchange rates and the terms and conditions guiding them.
3. MAKE YOUR CHOICE
To make a choice from the list available to you, choose the bank with the least commission and most feasible exchange rate.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.