How forex brokers make millions of dollars monthly with absolutely no cost

One may begin to ask why go into writing about forex brokers and how they make stupendous wealth from traders. But there are some factors that will prompt me to writing this. First to show how all traders help forex brokers or so called market makers most of whom have no interest to make huge money daily without any corresponding returns for a great majority. And secondly to encourage wealthy individuals and groups who have where withal to venture into the forex brokerage business online.

Do you know that the forex industry needs your trades on a daily basis?

The truth is, if you don’t make a trade with other fellow traders, brokers won’t make any money, in order words you make them exist. To understand how brokers make money I would like you to follow these steps

  1. Spread: the spread is technically the difference between “Bid” and “ask” price. But basically it is where the forex brokers make most of their profit from. In conclusion, the higher the spread, the higher the brokers profit and vice versa.
  2. To stress this further, you trade and make profit your broker makes and keep his profit. You trade and lose, your forex broker makes and keeps profit.
  3. So you see forex brokers don’t care whether you make a kill in your trade.

 

SWAP: although not all brokers charge swap but most brokers do. Swap is simply a charge or fee for leaving your trade overnight. There are positive and negative swaps. There are certain currency pairs you pay swap for and there are others you are paid. The best way to avoid swap is never allow your trade overnight. Get more information on your forex broker’s policy with regards to swap from their website or if possible make a call. Note that in majority of instances what you pay for swap is usually higher than what you are paid. Your broker of course fixes them according to global market conditions. That is why they are called market makers.

 

Commissions: some forex brokers charge both swap and commission on a single trade. Commissions are whatever the trader has paid already as spread. In some instances some crook brokers charge both commission and swap and this is most unfair. This can make trading highly expensive for individual traders but extremely lucrative to the broker.

Wondering how much a broker takes monthly; well let’s take an example suppose a broker with a client base of only forty thousand active traders (small number) with an average of fifteen thousand standard accounts. If this broker only charges 2 pips spread on the EUR/USD pair. That amounts to $20 per trade each trader places. Assuming all fifteen trades an average trader places daily putting this together, we will arrive at 5*15000=75000 *$20 = 150,000. That is a cool 1.5 million US Dollars daily minus revenue from swaps, commissions and spreads from mini and micro accounts without raising a finger.

If you’re not watching they will be making a whopping 30 million dollars in 20 days guaranteed. Some of these brokers have investments in more than 5 countries, and they keep advancing in technology.

But look, they are doing their best considering the large investment they put up with human resources, technology and strong advertising campaigns

Comments

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  3. This is an informative post, thanks a lot!

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