How does Plus500 makes money?
Plus500 offers many free products and services. As a user you can try out the options without any risk with the free demo. Plus500 also offers free use of the CFD stock market graphs. When you trade with real money, you do not pay commissions on your trades. However, every company must make money. In this article, we take a look at how Plus500 makes money.
First way: calculating a spread
The first way Plus500 makes money is by calculating a spread. All brokers charge a spread. The spread is the difference between the buy and sell price of a security. These are relative costs that increase when you trade with larger amounts on Plus500.
With every CFD you can easily see how high the spread is that you pay. Under the button information you can find this information. With some CFDs you pay a fixed price per unit. Other CFDs have a dynamic spread. When there is a dynamic spread, the transaction costs may change depending on the demand for the security.
Second way: the financing costs
Plus500 also makes money from financing costs. On Plus500 you can trade with leverage. This means that you can execute larger trades with smaller amounts of money. When you trade with leverage, you borrow a big proportion of the trade amount from Plus500. Plus500 calculates interest costs or financing costs over your trades on a daily basis.
Do you close the position before the premium is charged? Then you pay no financing costs over your trade. Do you want to know in detail how the costs are built up on Plus500? In our article costs on Plus500 you will find all the information you need.
Trading with Plus500
By charging transaction costs and financing costs Plus500 can make money. On one transaction, the amounts they earn are negligible. However, in 2019, 200,000 customers traded with Plus500 who jointly executed millions of transactions. This together ensures that Plus500 can earn a lot of money from its customers.
You don’t have to feel guilty when you use the Plus500 free demo. With this demo you can practice trading CFDs on shares and cryptocurrencies without any risk. Use the button below to get started right away: