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Instead of making money through commission like in stocks, brokers in the FX market "charge" their clients through the bid-ask spread. The spread is measured in pips and is the difference between the "sell" price and the "buy" price. They make money off this difference.
about 1 year ago
Answers (1)
Brokers profit from the spreads, which is the difference between the bid and ask prices. For example, the broker could set the bid price at 1.2000 and the ask price at 1.2004. If the trader takes a short position, he'd be able to sell at 1.2000 or a loss of 4 pips. If he has a $100,000 lot, then the broker just made $40 on that transaction.
about 1 year ago
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