Myths Debunked and Margin Explained!

As the FX industry has expanded and become ever more competitive, some firms have become very creative in their search to differentiate themselves from other brokers!

If you have been taking responsibility for your organisations FX requirements for some time, I’m sure you’ve heard such statements as ‘we are a trading house, not a brokerage’ or perhaps ‘we have perfected the P2P market’ or the equally puzzling ‘we work off volume not spread’

If you have heard any of the above or similar before, I’m sure you’ve been left scratching your head wondering just exactly what they’re trying to represent themselves as and if any of what they are saying is true.

The Truth

The simple truth is that these are merely sales tactics with the intention of seeming like a bigger more secure business or that better rates are in some way guaranteed. In actual fact all FX brokers buy at the same price, c. 2 pips off the Interbank-Rate and then have the ability to offer their clients a rate based off where the Interbank-rate is trading, the difference between the interbank rate and the client rate is the margin

Establish your Margin

Due to the opaqueness of financial services and in particular deliverable FX, most people we speak to either don’t know their fx margin or have been told a figure but don’t trust it. 

To quickly establish your FX Margin, do one of the following:

• Simply ask your FX provider

• Send us your previous trade confirmations to info@pangeafx.co.uk

• Give us a call on +44 (0)203 903 1860 and we can explain how to calculate it

 

A Working Example

Recently, we started working with a gym equipment retailer who buys 1.5m Swedish Krona per month.

They had no idea that the margin being applied by their previous broker varied between 1.5-2%. We quickly established their margin and not only did we drastically reduce it, but by utilising our transparent pricing our client can now see that there margin is fixed and doesn’t fluctuate from trade to trade or after the ‘honeymoon’ period.

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