Hello,
I am new to FX trading and am going through the School of Pipsology. I have some basic questions though, mainly about how profits are made, mainly by the brokers and interbanks.
It is my understanding that brokers make their money off of the spreads that they quote, since there are no broker fees that are paid for FX trades. For example, a broker gets a tight bid/ask spread from an interbank and than widens the spread and sends the widened bid/ask to their clients. After a deal is made, the broker goes ahead and sells/buys to/from the interbank, which is quoting a tighter spread. Are there other methods that brokers can use to make money?
I am less clear on how interbanks or other large banks that act directly as the counterparty make money. For example, if I am a large client with a large amount of money and I am trading directly with a bank, how does the bank make money off of me? Can you give me some examples?
Thanks for your help. Any info is greatly appreciated
