How Brokers Make Money

[BlueHorseshoe 10]

Somehow I stumbled across this - http://www.guardian.co.uk/commentisfree/joris-luyendijk-banking-blog/2012/apr/30/interdealer-broker-voices-of-finance - absolutely no precise practical value, but interesting nonetheless . . .

 

BlueHorseshoe

[henryduncan12 10]

Thanks BlueHorseshoe to share this article link with us. It is an informative and useful article for me.

[Mysticforex 13]

Yes, agree. A very interesting read.

[Savant 10]

Me too, interesting and useful reading..

[samuel23 10]

Somehow I stumbled across this - Interdealer broker: 'I'm one of those shouting guys on a trading floor' | Joris Luyendijk | Comment is free | guardian.co.uk - absolutely no precise practical value, but interesting nonetheless . . .

 

BlueHorseshoe

 

Thanks a lot for sharing this with us. It is indeed very useful and am sure many can learn from it. I would encourage everyone to atleast read it once and see how this can have a rapid effect!!

[tradeforever 10]

I think Brokers earn money by spreads.

 

With each pip you win, you give broker a small money per pip. So, whether you win or lose, broker also earns money.

[samuel23 10]

Definitely mate. If you are open an account with a broker am sure they will have to charge you but exactly how much, i really do not know. Well, this also depends with which broker you are trading Forex. Normally, they do charge their interest and it may depends on how much you have win in the market. However, the best thing i presume is to trade max on demo account as you will be able to know whether the broker is reliable or not!!

[tradeforever 10]

Some unreliable broker can cheat us by adjusting the MT4 Platform, requote and trade againts us.

 

It's very bad but if you choosed wrong broker, you could get lose money not by your skill. :doh:

[BlueHorseshoe 10]

Some unreliable broker can cheat us by adjusting the MT4 Platform, requote and trade againts us.

 

It's very bad but if you choosed wrong broker, you could get lose money not by your skill. :doh:

 

Hi Tradeforever,

 

Not all fx brokers make their money from the spread (or so I have been informed) - some just charge the very small spread of the underlying market and then a fixed commission per trade rather than 'marking up' the spread.

 

As another alternative, you can trade many major currency pairs as futures. These are exchange traded and therefore well regulated, and although you'll have to pay commission the spread will be just like other liquid futures contracts (seldom more than a single tick). Also, you'll be able to see volume, which you can't in the interbank market. If you trade currency futures then the conflict of interest issue with brokers trading against you disappears.

 

Hope that helps.

 

BlueHorseshoe

[samuel23 10]

Some unreliable broker can cheat us by adjusting the MT4 Platform, requote and trade againts us.

 

It's very bad but if you choosed wrong broker, you could get lose money not by your skill. :doh:

 

Ya this is true, we can find many unreliable broker across the net and we need to make sure that we are not one of their victims. We should investigate to the maximum in order to distinguish whether they are reliable and also transparent.