How does forex trader make money?
With what or on what does a Forex broker earn?
Forex trading for many people looks like easy way to earn money. But not all is so simple, and in
order to start earning trader must put a lot of efforts.
Forex brokers earn in the process of trading, receiving a certain percentage of commissions from
sales by a trader. Traders are people selling. They are obliged for each transaction to give part of
the money to the broker. It would seem that this is the broker's earnings, but here there are many
features and pitfalls that should be familiarized with.
How does a regular Forex broker earn?
Many dealing companies bring to the Forex market not exactly the client's position, but only
some of them, giving out for their own. That is, the trader, as it were, cooperates only with the
broker, without going into the details of the Forex broker's work and the deal on the foreign
exchange market independently. Such work of a broker-dealing company is not dishonest in
relation to a trader, since the trader's transaction is preserved, and the broker does not interfere
with his winning clients.
Forex brokers quite earn not only on the losing traders who give significant sums in case of loss
to the broker. In the event of a trader's winning on the Forex market, the broker is not forced to
hunt for the deposits of his traders. It's enough for even winning traders, the number of which
exceeds the losses, to stay afloat and earn a lot of money.
Earnings on the increase to the spread
Some dealing companies-brokers work without commissions, that is, clients-traders should not
pay companies for each (successful or unsuccessful) transaction. So they earn? Spreads play the
most important role here.
How and on what does ECN Forex broker earn?
ENC brokers in their activities are not particularly cunning: they work on stable quotes, do not
change prices, and passes them on the Forex market the way the trader installed them. The only
source of earnings for such a dealing company is the commission fee, which is steadily charged
on each transaction.