How do brokers make their money?

[jas0441]

I am going through the School of Pipsology and learned there are no commissions with forex trading. How then do all these broker, all the companies that advertise here and provide free demo accounts make their money?

[nevergiveupss]

I am going through the School of Pipsology and learned there are no commissions with forex trading. How then do all these broker, all the companies that advertise here and provide free demo accounts make their money?

They make money on the spread. For example, EUR/USD (1.3145'bid' 1.4347'ask') you see, there are 2 pips different. Either you long or short, they still make money. these type of brokers we called market makers.

ECN brokers, however they do charge commissions. However, they require higher initial deposits compare to market makers due to the lower cost of trading. Hope to answer your question.

Cheers

[eremarket]

Spread, and taking the other side of the trade. Considering most forex traders lose, this works out well for the broker.

Jay

[purplepatchforex]

Brokers also have market makers, which make money from the markets.

[PaladinFX]

There is a pretty good graphic in the School of Pipsology which explains how exactly brokers make money, using the different spreads offered to them by their LPs.


Cheers,
O.

[eremarket]

It's a beautiful Saturday morning ... I log on and find Dale and Jay noob bashing already.

To reply to jas0441's question: There is a pretty good graphic in the School of Pipsology which explains how exactly brokers make money, using the different spreads offered to them by their LPs.



Cheers,
O.

Not noob bashing O... really just "boob" bashing. spammers tryin to hustle a buck today. lucky babypips.

Jay

[jas0441]

Thanks all for the info. Perfectly clear now.

[dpaterso]

Alright:

Time to 'clean up' folks. I see that other thread has been deleted. I have to admit I'm a BIT surprised. FAR worse things have gone on here!!!

Anyway: I'm going to delete my posts here. Jay and Oliver1968: I hope you don't think me 'out of line' but this is a genuine thread so how about you do the same and keep it clean (but of course it's not my right to ask).

jas0441: thanks for taking all this stuff in the spirit in which it was meant. As I noted: it had nothing to do with you at all. But use 'old timers' here try our best (not even sure WHY but still) to keep new traders from getting 'fleeced' and that other thread was a 'fleece' for sure.

I'll delete this post once I hear from Jay and Oliver1968 (the 'off-topic' posts I'm referring to by the way).

Regards,

Dale.

[dpaterso]

OK. Well. I've done my part (and will delete thist post too shortly).

jas0441:

In my next post here I will give you some more information pertinent to your question. It doesn't explain EXACTLY how brokers make money (or maybe it does to some extent) but you've been given some answers here already anyway.

Regards,

Dale.

P.S. Too bad about the other thread. TechTraderCentral is 'back to normal' and it's BORING!!! LOL!!!

[dpaterso]

Hey jas0441.

Here is some ON-TOPIC information for you (taken out of context of the thread the first part of the post may not make sense but read from the heading 'Different Market Segments':

Technical Trading Systems at TechTraderCentral - What do you need???

Regards,

Dale.