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How Forex Brokers Make Money? ☝

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★ How do forex brokers make money? ★ Open a Demo Trading A/C http://www.financial-spread-betting.com/intertrader/intertrader.html ★ If you found value in watching this video, PLEASE LIKE AND SHARE so we can do more! How do forex brokers make money? Have you ever wondered how your CFD broker or spread betting provider makes money? These brokers typically have big infrastructure costs, technology costs, staff costs, marketing costs..etc yet they still seem to make decent profits. How do they do it? The first one is the spread - this will be in pips if we're talking forex. With major pairs the bid-offer spread will be quite tight but spreads will widen for the more exotic pairs. Number 2 is overnight financing that the broker will charge you for holding positions overnight. You will be charged a small fee for each day that you hold onto the trade. The longer you hold an open trade, the more you will be charged.
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Text Comments (23)
Javier Andre-Orlich (21 days ago)
Thank you for the awesome explanation! One thing I would like to get clarified if possible: how come brokers are able to leverage all those individual trader's deposits and still make a profit from it? It seems to me that using leverage to "borrow" money from the brokers would put brokers at a very high risk if the price moves against the trader's forecast. I understand most of the trades get cancelled-out by traders on both sides (buying vs selling), but by using more money than is actually deposited on trader's accounts shouldn't that make the broker lose money? Still can't figure out how that part works.
UKspreadbetting (21 days ago)
They charge you interest to 'lend' you that money - it is called FINANCING and it amounts to extra revenue for the broker. When you use that extra buying power you are typically charged 2.5% over the central bank's interest rate (or over LIBOR if in the UK)
Luano Fortuin (4 months ago)
what are your comments on avatrade. can they be trusted?
UKspreadbetting (4 months ago)
I believe they are legitimate, however having said that I've never traded with them.
Honeybadger (5 months ago)
There are too many retail traders who do courses and trade for years and are never taught this, but in my mind this is absolutely critical knowledge.
ma.theresa sarmiento (5 months ago)
Maybe we can discuss again on TRADING THE INTEREST RATE DIFFERENTIAL (carry trade).
UKspreadbetting (5 months ago)
What would you like us to cover exactly? btw thanks for your support and comment contributions.
liaan bailey (5 months ago)
Hi what do you think of FX pro as a broker
UKspreadbetting (5 months ago)
My understanding is that they are regulated but operate using a B Book model so they could be trading against you at times?
Edin Arneas (5 months ago)
Your work is a nice, here. I like very much and appreciate this video. Hope your work will be well known one among traders.
whoaitstiger (5 months ago)
I can tell it's going to be a good one when I see a cartoon character on the whiteboard. :D
L (5 months ago)
brilliant as ever
Andy Shortland (5 months ago)
is there any chance you’re able to produce a video on fading a trade (in depth), great video 👍🏻 📈
UKspreadbetting (5 months ago)
here it is Fading Extremes in Price https://www.youtube.com/watch?v=v90Ul7QGLT4
UKspreadbetting (5 months ago)
yes a video on that one is coming soon :)
Anthony (5 months ago)
Love it

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