Bob is completely right about all of this, Sureshny.
If you’re still here, you need to read and re-read his post, and ignore what was said before it, which was just repeating widely believed forex marketing myths and posted by people whose understanding of the forex market isn’t far advanced from your own.
Welcome to the forum bro, many thanks for sharing your thoughts here.
I just want to add that we talk of our broker as a bucket shop and that it appears to be a bad thing. It is not. There are a good number you can trade with. You just have to read their PDS. The more they disclose, the better they are.
“FOREX.com does not charge fees on forex trades. We are compensated via the spread, which is the difference between the bid and ask.”
https://www.forex.com/en-us/support/faqs/pricing-and-fees
Maybe member @FOREX.com ( Verified Broker Support and Analyst) can clear up some of the confusion in this thread…
Maybe Jason can.
But it doesn’t change the fact that the bid and ask price is that of the underlying asset. In turn they use this value to enter into or exit from the contract. They don’t make money by this but it allows them to manage risk. They make money when we make dumb decisions about when to enter and when to exit.
Example loss between 1.0812 and 1.0810 = 2 PIPS
Thats not 2 pips its 2 points! 10 points is 1pip
so 2pips is from 1.0812 to 1.0832
Is this right?
I thought a pip is the smallest increment whereby a change in exchange rates can be measured. Since most pairs are counted to the fourth decimal, a drop from 1.0812 to 1.0810 would constitute a loss of 2 pips.
Maybe you mean that, in a standard lot, the value of a pip in USD is $10…?
10 Tiny little points = 1 PIP[quote=“philip338, post:32, topic:130260”]
so 2pips is from 1.0812 to 1.0832
[/quote]
Correct
10 pipettes make 1 pip, but pipettes are the fifth decimal place, whereas the example is only drawn out four places.
What the heck is a Pip?
The unit of measurement to express the change in value between two currencies is called a “pip.”
If EUR/USD moves from 1.1050 to 1.1051, that .0001 USD rise in value is ONE PIP.
Doesn’t that just pee you off the Bugger’s,
You can still use math to manage your risk
though if you ever found yourself at a night out at the casino… never lost at roulette the few times i have played it,
Not correct, that’s 20 pips.
2 pips would be 1.0812 to 1.0814
Thanks for the reply guys. I will read it
Correct[/quote]
It isn’t correct. It’s wrong!
What a disaster of a thread !
I have just read the whole thing and am seriously disheartened at the total lack of knowledge expressed as “Facts” to you.
Read, study and believe what you have been told in this thread by @_bob , @LaughingCharlie , @MrDE.
@eddieb seems to be correct also and @Trendswithbenefits submission is fine.
Make a note of the other names and treat anything they say with suspicion in future.
Is correct, as is the rest of his post.
Is correct, but if I can say it in a slightly different way ?
The spread (Lets say 2 pips for example purpose) is the “Bookies edge” (“Bookie” = “Broker” )
Now when you enter a bet, you are committed to paying the "spread, win or lose. with many platforms, the moment you enter the bet you are immediately in a losing position of 1 pips (example only). So if your bet moves 50 pips in your favour, you win 48 pips (See where the “Other pip” is taken later.
If the Bookie wins the bet and the trade has moved 48 pips against you (You are already “losing” 2 pips remember?) then the bet gets closed and you lose the 50 pips value.
So now you are in this bet and price is moving your way 
“Price” gets to your “Take profit”, but the bet does not get paid ! (see later) - Or Your bet is losing and "Price gets to one pip away from your “Stop loss”, but the bet gets closed and you have lost 50 Pips.
WHY ?
Because if you are in an up bet, you effectively have a “Sell” order in place as a “stop-loss”. This will get filled at the “Bid” price. Think of the Bid in an up bet (when price is going down) as a grabbing hand trying to grab your money ! This grabbing hand is extended 1 pip in front of “Price” and grabs your money for the bookie.
If you are in an upbet and price reaches your “Take profit”, you have a “close order” in place which behaves like a “Sell” order and gets filled at the “Buy price” - think of the "Buy price " as a sulky child trailing behind and trying to avoid having to “pay you”. The “Price” is well past your “take profit” before the sulky child will finally hand over your meagre winnings!
The exact reverse happens in a “Down bet” the “grabbing hand” is the “Ask price” (when price is going up) and the “Sulky child” when price is going down.
Sometimes the “Bookie” seems to “accidently” incorporate “quirks” into his software, to extend the “grabbing hand” and an example seems to be shown here ;
https://forums.babypips.com/t/whats-with-the-long-tails/119718
So you lose 2 pips on winning bets AND you lose 2 pips on losing bets.
Effectively if your trading neutral and winning 50% of your bets, each winner has to overcome a disadvantage of FOUR pips to cover the losers, before you even start to enter “Profit”.
That means that short - term traders, only seeking a few pips have massive “costs” due to the “spreads”, whereas long term traders can almost ignore “spreads”, except for incorporating an allowance in the positions of “stops” and “Take profits”, to allow for the “Grabbing hand” and the “sulky child”.
Now changing to “PIPS” - The position of the “Pip” value is the second decimal place on JPY bets like AUDJPY whereas it is the Fourth decimal place on all other instruments like EURUSD etc.
So for JPY bets the numbers will look something like ; 89.123, Satrt at the decimal point and count 2 to the right - so the fuull pip value is the “2” the “3” is the “Point value”
On other instruments such as EUR USD like ; 1.23456 , start at the decimal point and count 4 to the right - so the “Pip value” is defined by the “5” and the “6” is the “Point value”
That is about all I have to say, sorry for the lengthy post
I hope that helps
Many thanks for all the effort behind your post just above, Falstaff. The thread really was, as you say, something of a disaster!
Thank you for those kind words @LaughingCharlie. It is good to see good information coming from knowledgeable people like those I mentioned. There are still a few here who actually care that the Facts are presented as accurately as possible to those who really need our help. 
And Just to add to the confusion.
Spot Currency Units
When you think of spot currency, stop thinking in terms of notional, you have to think in terms of Units. That is how the Market Makers come up with fractions, Standard, Mini, and Micro Lots, Nano Lots, not Dollars, or Pounds or Yen. 100,000 units make up a standard Lot.
On the matter of Spreads.
Spreads are how Market Makers make money on retail traders who are successful, obviously they have a bigger take in the short run if the trader blows up. On an Institutional platform, you are charged a fee, and the spreads “float”. In other words, you will see anywhere between .2 and 0. This is a natural function of the market.
Finally please remember this.
Series 3 Exam Prep “Every major futures exchange operates a clearinghouse that acts as the counterparty to all buyers and all sellers”. Sooo, there is that. The fact that your Market Maker in Spot Currency acts as counterparty to your trade is nothing unusual or nefarious.
The Ever Elusive VIPER
I’m sure your additional information is sound TV, but I don’t think it contradicts anything here, does it ?
[Edit, fact is without the bookies, none of us could have a bet at all ! ]
Hey dude, nope no contradictions, just a bit of fleshing out for the tin foil hat crowd.
The Ever Aluminum Foil VIPER
to your edit:
that is not true. you can trade just the same and same leverage, instruments and securities without using any bookie and without much more money at hand. and the execution etc isnt any slower. even banks as your broker offer you the exact same (as advantage percieved) conditions like any bookie does- besides 24/5 trading (they offer only 14/5 trading)
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it just takes a bit more of knowledge of instruments available like, warrants- for example.
the only advantage of the bookies is that they support and finance websites like this one here which advertises the ease and the easy usage of the bookies to the people who are just starting out.
the comunities formed on such websites and the connected forum then do the advertisements for the bookies by themselves. -just remember how many posts there are asking “which broker should i use?” and the to it belonging always same answares of members who are trading with a bookie and arguing with others how good their bookie is.
but the truth is that no pro or semi-pro trader trades with any broker advertised on this webpage. the truth is that by the broker choise someone can tell how experienced of a trader someone else is.
the truth as well is that bucket broker are not needed, not even by the people who only have/want to invest $500/$1000 into the trading idea. they just found a good method to make momey on inexperience and are using their advertisement machine in very effective ways. add to it a fairly easy to use trading platform/program and a very easy way to open and close trades (idiot proved) and the newbie retail traders hook on them without even knowing that there are long lasting proved and fairly strongly regulated alternatives that do not act as your counterpart in trades.
To be honest with you, Having been forced by my Government, to bale out most of the major banks using my own money, after their diabolical activities pre-2008, and having been charged for “credit” at 18-22% in gratitude whilst being “Offered” interest on Savings of £200k plus of nothing better than 1/4 % by those same banks, I’d rather trade with a “genuine bookie” who unlike “Insurance companies” and their associated “Banks” refuse to take bets on Life or death events !
There is no sign that the “Banks” have changed their ways since either - here is UK there is a major enquiry about to be undertaken into the activities of one, possibly two in forcing business clients to become “Clients” of their "Rip off subsidiaries who eventually forced them into unneccessary liquidation. These in large numbers for huge amounts!
They have been shownn to be “Fixing” LIBOR Rates to their own advantage at the expense of retail customers. The nefarious activities of these institutions just goes on and on - They are solely responsible for selling unworkable and unfit PPI insurance worth billions to anyone who wanted a loan and is now being recleimed by millions of customers - again at MY expense - because I was too bright to “Fall for the scam!” But now they increase my charges to cover their own costs in repayments to the victims !
And you want me to trust these evil peopleand pay extra profits to THEM - rather than a proper bookie ?
I’d prefer one who actually does “hedge” imbalances in the rounding of his book in the real market though.
So which banks offer “Demo accounts” and why would they want to close their trading platforms for 10 hours every day ?
Another take on “Banks” and their activities ;