How does InstaForex exchange rate converter for deposits and withdrawals differ from other forex brokers?
If you replenish your account in a currency that differs from your account one, the company uses the current market rate. The information on the deposit rate is available both in the client area and on the main website of the company (conversion occurs at the BID price).
When you withdraw funds in a currency other than the currency of your account, the company uses the average exchange rate. In some cases, determining the rate, the broker takes into account the current rates and the amount of deposits.
The InstaForex average exchange rate is more beneficial than systems of internal rates used by other forex brokers as internal rates include huge internal spreads. It means that the replenishment is charged at one rate, and the withdrawal at another.
The difference between the withdrawal and deposit rates can be up to 10%. Thus, when you deposit 10,000 RUB to your account, you are highly likely to lose 1,000 RUB, even if the withdrawal occurs on the same day.
Using the weighted average approach to determine rates gives a trader an opportunity to replenish 10,000 RUB and get back the same 10,000 RUB for the same amount of US dollars.
Example of calculating the weighted average exchange rate:
At first, a client deposited 10,000 RUB to his/her dollar account at the rate of RUB 66.57 per USD 1. At the time of crediting this sum to an account, the amount equaled $150.22.
After a while, a client made one more deposit of 5,000 RUB at the rate of RUB 63.81 per 1 USD. At the time of crediting this sum to an account, the amount equaled $78.36.
Later, a client decided to withdraw the profit of $300. The weighted average exchange rate is calculated according to the formula of the weighted arithmetic mean:
Thus, the available amount for withdrawal is 19,695 RUB.