Is fx opaque? - guide to making international payments

[FX Capital]

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[FONT=&quot]Hi all, please feel free to see below some interesting info on foreign exchange and international payments. If you need any further information please feel free to send a PM.
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[FONT=&quot]Currency brokers, and sometimes banks, often [/FONT]
[FONT=&quot]make these claims. They sound great, but what [/FONT]
[FONT=&quot]do they really mean? [/FONT]
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[FONT=&quot]100% Commission Free[/FONT]
[FONT=&quot]All currency brokers make their money by [/FONT]
[FONT=&quot]buying currency in the wholesale market and [/FONT]
[FONT=&quot]selling to customers at a marked up price.[/FONT]
[FONT=&quot]The difference between the wholesale price and [/FONT]
[FONT=&quot]the customer price is commission.[/FONT]
[FONT=&quot]So “100% Commission Free” is not true[/FONT]
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[FONT=&quot]No Payment Fees[/FONT]
[FONT=&quot]This is a little more subtle. The reason that [/FONT]
[FONT=&quot]payment fees “appear” to be free, is that the [/FONT]
[FONT=&quot]cost of the payment is covered in the mark-up [/FONT]
[FONT=&quot]the broker makes on the wholesale price.[/FONT]
[FONT=&quot]So, you do in fact pay the payment fees, [/FONT]
[FONT=&quot]although without realising it.[/FONT]
[FONT=&quot]So “No Payment Fees” is not true[/FONT]


[FONT=&quot]Dedicated Dealer[/FONT]
[FONT=&quot]Some of the larger brokers have 1,000s of [/FONT]
[FONT=&quot]clients. So how can a dealing team of 10-20 [/FONT]
[FONT=&quot]people covering 1,000 clients be “dedicated to [/FONT]
[FONT=&quot]you”?[/FONT]
[FONT=&quot]Some smaller brokers do have dealers who [/FONT]
[FONT=&quot]cover an appropriately sized client base.[/FONT]
[FONT=&quot]So “Dedicated Dealer” may be true[/FONT]
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[FONT=&quot]Better Pricing Than Your Bank[/FONT]
[FONT=&quot]Yes, the majority of brokerages do give better [/FONT]
[FONT=&quot]pricing than your bank. But the question you [/FONT]
[FONT=&quot]should be asking is “i[/FONT][FONT=&quot]s my pricing consistent[/FONT][FONT=&quot]?”.[/FONT]
[FONT=&quot]However, what you need to be aware of is [/FONT]
[FONT=&quot]“cheap pricing” (better than bank) gets you [/FONT]
[FONT=&quot]hooked and then over time your broker “widens [/FONT]
[FONT=&quot]your prices” hoping you will not notice. A [/FONT]
[FONT=&quot]common trick used by many brokers.[/FONT]
[FONT=&quot]So “Better Pricing” may be just a tempter, [/FONT]
[FONT=&quot]but be aware when your back is turned[/FONT]
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[FONT=&quot]In conclusion...[/FONT]
[FONT=&quot]Yes, the FX market relies on opaqueness to [/FONT]
[FONT=&quot]make money. Many of the claims are really [/FONT]
[FONT=&quot]“marketing myths”. The victim is unfortunately [/FONT]
[FONT=&quot]the client.[/FONT]

 

[FX Capital]

The author is very intelligent and he covered all the things which are necessary to explain for here,that's why I learnt a lot of things by his work.

Thank you for the positive feedback. I certainly feel that the foreign exchange industry could do with being a long more transparent.