How much does it cost to trade with IG? – Spreads & fees explained

Trading can be a wonderful tool to enhance one’s financial position. It can open doors to opportunities that help you increase your wealth. We all require money to fulfill our worldly needs, so we cannot ignore that making money is more of a necessity than our desire. Though we can survive and live peacefully without being rich, we should not despise the act of making money. 

People often get desperate in their search for a way that could make them rich. As a result, they either follow shortcuts that are not fruitful or lead the illegal path. However, a smart person would choose trading as the means to increase wealth. 

We must know that there can be no other better way that gives you better returns in profits. Moreover, since the takeover by online modes, you can trade with multiple asset classes with just one device and a few clicks. 

But, being so easy also poses greater risks. Since it is so easy to enter online trading, beginners without prior knowledge get easily drawn towards it. Unlike professions, such as doctor or lawyer, you need not undergo years of training to make your first trade. 

As a result, you may make moves that can end up in complete loss of funds. But, such a scenario is subject to poor understanding and lack of knowledge about trading. You can avoid the loss by knowing about the markets and the strategies that work. 

People often enter the trading world with multiple ideals in their minds. So, their choice of assets may vary along with their methods. But, the main goal in all the cases will be to earn profits. Therefore, if you are a beginner trader, it is important to understand the need for a reliable broker.

The brokers can help you teach the basics of trading and mediating the transactions. They let you use their platforms and features and charge an amount for the same. So, a broker is essential for a beginner trader to start the trades as they fulfill all the trading needs. When you have a trustworthy broker, you can expect more in returns and ensure the safety of your funds.

 IG is one such broker that can solve all your trading troubles.

It came into existence in 1974 through the efforts of its founder Stuart Wheeler. Initially, it offered people the opportunity to trade gold prices as an index. However, that was without the actual purchase of gold in physical units. Later, IG made its place on the London Stock Exchange as IG Group plc in June 2000.

IG has proven itself to be a renowned broker in the present day. Moreover, it is a regulated broker monitored by the FCA. So, we can be assured of its operations and standards.

It also aids the newbie traders through a demo account. They can also use various educational materials to guide themselves in the progressive direction. It holds the awards of the best Forex and CFD broker. It also has the award of the best overall broker in 2020. 

IG also has its own Academy courses, webinars, and seminars. Traders who seek to enhance their market knowledge can use them wisely. One can start trading with IG without much effort. 

All she is required to do is open an IG live trading account. It is advisable to start with a demo account, but later, you will have to switch to a live trading account to deposit funds and begin trading. 

You can fund your trading account with an IG minimum deposit and start investing across various assets. It is an untroubled process that you can easily execute on its website. 

Though depositing and withdrawing are effortless processes that you can undertake as you like, you must scrutinize the costs first. IG makes most of their money through spreads. It offers competitive spreads and thousands of trading instruments to professionals and beginners. But you should be aware that a small portion of its revenue comes from other fees as well.  

Though it does not charge any withdrawal or deposit fees, there are spreads and costs that a trader has to pay while trading.

Therefore, as we mentioned before, we must look into the conditions for the spreads and fees before choosing IG as the trading partner. So, let us understand the basic terms first and then comprehend how much it will cost to trade with IG.

What do spreads and fees signify in trading?

In trading, a spread represents the difference between two prices. Among all spreads, the Bid-ask spreads are the most common type. Spreads are usually measured in PIPs or percentages in points. It refers to a minor shift in the price of the asset. For example, Forex pip represents the minor shift in the price of currency pairs.

Most currency pairs are typically priced to four decimal places. The pip change represents the last decimal point in them. Therefore, it is equal to 1/100 of one percent. 

We can understand a currency pair as a quote of two separate currencies. The price of one currency is expressed against the price of the other in it. For example, EUR/USD is trading at 1.1116, so if a trader wants to buy 1 EUR, he must pay 1.1116 USD. 

We can understand a spread in other words. It denotes the difference between a security’s or asset’s bid (buyers) and asking (sellers) prices. Traders should always note the spread rate before trading because brokerages make money through it. It is what they charge you to use their data to make trades. So, the understanding of spread is crucial for traders. Moreover, a broker can offer a fixed or floating spread. 

When you trade with spreads, it is also known as Relative value trading. On the other hand, some brokers levy fees from their customers in exchange for their services. Though most platforms like IG make their money mostly using spreads, some charge both. Fees are fixed charges and are rarely changed.

A spread is a word thrown around commonly in the financial world. It influences how much trade would cost – the lower the spread, the less it will cost. Spread is used by many brokers, market makers, and other providers to mention their pricing. 

It becomes useful in covering the cost of the broker’s order execution. Many brokers also have fees associated with placing trades on your behalf, as we mentioned before. 

A broker has to look into the costs of creating systems, paying people, marketing, etc. Such charges are financed by the spread and fees collected from the clients. If you have just entered the field, you should know some assets, like stocks, will not have a spread. The broker will instead charge you on a commission basis; other assets may have a combination of the two.

One benefit for the traders is that the spread is calculated on its own when you open and close positions. As a result, you need to do nothing to contribute to the spread.

When you make a trade, the spread is automatically taken into account. The buying price is slightly higher, and the selling price is slightly lower than the asset’s initial price. 

If we discuss Forex particularly, major currency pairings have a lower spread since they are traded in big volumes. In contrast, obscure pairs have a greater spread.

While dealing with spreads, Bid-ask is the common one, as discussed before. It is applied when trading in assets like currency pairs. One of the main uses of this spread is to measure market liquidity. Some markets have more liquidity than others. As a result, their spreads are lower.

If you focus on Forex, we can say most currency pairs in forex gets exchanged with no costs. However, the spread is a cost that arises with the deal. Various factors can influence the size of a spread. Liquidity, volatility, and volume are some factors that typically affect the size of a spread.

Since we also know that currency is the most liquid asset in the world. So, it has the minimum bid-ask spreads (one-hundredth of a percent). At the same time, Stocks and other less liquid assets may have much higher spreads. 

 Market price should be above the spread price if you want to make a profit. A new trader must also be aware that heavily traded assets will have a tight spread. Therefore, it is now clear that the trader must always check the spread size and place their orders accordingly.

In addition to the bid-ask spread, another spread type exists. It is called a credit spread or, in other words, known as Yield spread. It is not so common. However, we can understand yield spread as the ratio of the returns on different investments with varying maturities or risk profiles. We can view that by subtracting the return of one asset from the return of the other. 

We must know that the Brokerages make money through spreads. So it can be seen as a charge they issue for their services. Such services include the data provided for trades and the trading platform as a whole. But they cannot entirely set the data and control it. Therefore, we must observe various factors affecting the spread rate as well.

Regardless of your trading goals, you need to research the trading platform. Many of them have ridiculously high spread rates. Some of them also incorporate hidden charges in providing essential services. Those charges may seem little at first glance. But they can add up over time to become a liability. 

Hence, knowing about spreads is a must for anyone preparing to start trading. Stepping into a trade without knowing its spread rates can cause a heavy loss to the trader. Beginners often miss looking at a spread value, which results in losing money on trades. So, a trader can avoid it by paying serious attention to it.

IG spreads

IG is a broker that tries to maintain a narrow spread for its various types of assets. It does not aim to generate revenue from the losses incurred to clients. Therefore, it does not hide its fees and spreads. Moreover, its spreads can go as low as 0.1 pips.

Forex Spread CFD

Market	Minimum Spread	Average Spread
EUR/USD	0.6	1.04
AUD/USD	0.6	1.03
EUR/GBP	0.9	1.89
GBP/USD	0.9	1.83

Commodities Spread CFD

Market	Minimum Spread
Spot Gold	0.3
Spot Silver (5000oz)	2
Oil – Brent Crude	2.8
Oil – US Crude	2.8

IG fees

Deposit fees

As a non-trading fee, deposit fees may not be pleasing to anyone who wishes to deposit money in their account. But it is a relief for a trader to know that only a few brokers levy this uncommon fee. Unlike such brokers, you can deposit your funds freely as IG does not charge any deposit fees from its customers.

Withdrawal fees

We can say that IG does not charge any fee from its customers. But, it applies as long as they are not making an international bank transfer. 

If you opt for an international bank transfer to withdraw funds from your IG trading account, there may be a withdrawal fee of 15 GBP. Moreover, you should be careful if you use a currency different from GBP to request your withdrawal. In that case, you must pay a withdrawal fee equivalent to 15 GBP in that currency. 

The basic withdrawal methods are free from any charge at IG. That means you can withdraw your funds through bank transfers, credit cards, or debit cards without any withdrawal fee to the broker. You can choose any such withdrawal method without worrying about any withdrawal fee. 

Swap fees/overnight fees

Swap Fees are a type of trading fee. Many brokers levy a swap fee. They are also called overnight fees. Usually, while holding a position in a trade, the trader must close the position within the prescribed time limit. So, overnight fees are charged if the trader fails to close or refrains from closing the position and continues to hold it longer. IG is also a broker that charges an overnight fee. If you hold the same position longer than 22:00 GMT, it is payable. However, IG will adjust the interest to your account.

Currency conversion fees

Currency conversion fees are common among brokers. When you open a trading account with a broker, you have the option to select the base currency. Once you select the base currency, the broker expects you to trade in that particular currency only.

However, many a time, traders wish to trade in another currency. In such scenarios, the broker has to do the currency conversion. So, for that service currency conversion fee is levied. IG also charges the same from its clients. It charges a standard charge of 0.5%.

Moreover, with IG, you can find your account to be set with an instant conversion option by default. So, when you make a foreign-currency profit, it is converted automatically.

Moreover, you don’t have to pay the charges separately as they are taken before the credit happens. Unlike other brokers, IG also offers additional settings through which users can set daily, weekly and monthly conversions.

Inactivity fees

As a trader, you are expected to continue trading without a gap. When you do so, the broker can earn more, so they don’t want their customers to stop at any cost. Therefore, various brokers levy an Inactivity fee from their customers. It is also essential for the maintenance, administration, and management of inactive accounts.

So, it compels you to place an order or deposit some amount before the expiry of the inactivity period. The period may range from 21 days to even 3 months with a few brokers. IG also charges the same, wherein you need to pay £12 on the first of every month after the period expires. However, it offers a long inactive duration of at least 2 years. 

Conclusion 

IG is a renowned online trading broker that offers world-class services. Any trader would benefit immensely with their quality services and expertise in the field. However, checking the spread and fees structure is essential before making the final decision. So, when we assess IG based on its spread and fees, we can conclude that it offers a low spread and affordable fees. Therefore it can serve as a reliable and outstanding choice for all those looking to begin trading.

FAQ – The most asked questions about cost to trade with IG :

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Last Updated on January 27, 2023 by Arkady Müller