Forex commissions are wrong

C2
1

I noticed that you got the value of simulated forex commissions wrong.

In my explanation I will use the InteractiveBrokers fee schedule but the “typical broker” and other brokers models are false just the same.

The real fees charged by IB for forex are 0.2 basis point x trade value (in the base currency), or in other words $0,2 per USD 10,000 currency units (…with a minimum of $2 per order in all cases)
https://www.interactivebrokers.com/en/index.php?f=commission&p=fx

C2 allows to trade in minilots only, that is to say 10,000 of the base currency of the pair, which is not necessarily USD 10,000 per say…

In practice, C2 charges $0.2 per minilot, all the time, on whatever pair which is incorrect. I am puzzled nobody complained yet.

The real world commissions are calculated this way.

  1. for pairs with USD as base currency (USD/CHF, USD/CAD, USD/JPY, etc) then 1 minilot trades $10,000 therefore $0.2 commissions is correct

  2. for pairs with base currency other than USD, then the commissions for each minilots need to be adjusted

  • 1 minilot on GBP/USD bought at ask 1.4650 level trades GBP 10,000 = $14,650 consequently the fees are really $0.2 x 1.465 = $0.293 (with a minimum of $2 for IB when such amount per side is not met)
  • 20 minilots on GBP/USD at 1.5500 level, well the associated fees that will be charged in a real IB forex account are $0.2 x 20 x 1.55 = $6.2 …not $4 like C2 models right now
  • 15 minilots on AUD/USD sold at bid price of 0.7200 level will have $0.2 x 15 x 0.72 = $2.16 fees …not $3 !

This is the same principle that should apply on other commissions schedules too. When $0.5 pip per minilot is mentionned …it is not really “per minilot” but per USD 10,000 trade value which is not the same…

2

The contracts are $10,000 per mini lot.

3

Take a trade of 10 minilots on GBP/USD here on C2 versus live FX accounts, the win/loss everywhere is $10 that is 10 x $1 for every 1 pip, which is fine ! on which commissions are then apllied (not fine on C2)

So it is not trading USD 10,000 per minilot, otherwise the win/loss per pip would have been less ($1 divided by value of GBP/USD on both sides).
It is actually trading 10,000 unit size per minilot, which is standard …here, the trade size is GBP 10,000,
Consequently the commissions need to be adjusted and this is the case all the times the trade unit will be different than USD

Just compare with various live FX brokers. Something is wrong the way C2 counts commissions against capital gains based on supposidly targeted “trade value”.

4

I think you should edit this to be … “that is to say 10,000 of the base currency”. I guess this is what PaulChaney wanted to point out.

5

Thanks Martin: my bad, I edited it all. The issue remains

6

Here is a practical example.

with real money.

Win = $500 exactly
C2 simulated commissions (IB broker) = - 50 x $0.2 x 2 = - $20 …while the live account fees will be really - 50 x $0.2 x (1.45742 + 1.45842) = - $29.16

This is corrupted behavior that will deceive investors when AutoTrading with real money.

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