Australasian Association for Information, Communication Technology

Australasian Association for Information, Communication Technology

How the professional brokers make their money?

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How the professional brokers make their money?

Most traders think that making money in Forex is very easy. They think of the brokers has their friend who has come to them in their well and woes. It is not right especially if you are trading in a financial market. When you are making money from Forex trading and investing in your broker’s service, it is no surprise that they are also making a small amount of money in Forex. This amount may be very small when you think of only yourself as their trader, but when they have got thousands of traders in line for their service, this seemingly small amount contributes to making a large amount of money for them. In our article, we are going to tell you how brokers made their money. It is always at your expenses that these brokers are leading their lives, but you have to know how they are making money from their clients.

Remember broker’s bonuses
You may jump in joy because most of the time brokers offer many attractive bonuses to traders. Traders could hardly resist themselves from these bonuses and they fall for these brokers. When you are sure to lose some amount of money in Forex, it is very good that you can make a very good even if it is small, the amount of money. These bonuses are offered by brokers, not for their big heart. They offer these bonuses to take Aussie traders from the other brokers and also to make their money. You may think how on earth are they going to make money when they are giving you money as bonuses? Things are not what it seems in Forex.
Let’s give you an example when you try to withdraw your bonuses, you will see that there are many fees added to your withdrawal. You may think it is only some dollars that is going to give you more money, this small dollar is how brokers made a profit. They have many charges when you are going to quit Forex trading. However, if you trade with an elite class broker like Saxo then compared to their offered service you are paying nothing. When you are trading CFD make sure that you are not comprising the quality of your broker in order to save some money.

Through policies, trading fees
Brokers have their own policies as regulated by the Forex bodies. When you are investing your money, you are under the agreements of their policies. It is one of the ways brokers made their money. They also charge you a very small fee when you trade in Forex. All these small fees sum up a large number when their traders are counted together.

Spread and commissions
This is the actual place where the brokers make their money. When you open a trade with a broker you have to pay a decent amount of fees to the broker which is known as the spread. The spread offered by many brokers will vary but the quality broker will always have little bit bigger spread. Some brokers often charge a commission to their clients for opening a trade which also includes a swap for overnight carrying the trade. But as a full-time trader, you should never comprise the quality of your trading broker to save a small amount of money. Consider your brokerage firm fees as your trading cost.

Useful information
Being a currency trader you will always have to deal with losing trades. So instead of thinking about your broker’s fees and commission you need to concentrate on your trading skills. Always aim for high-risk reward trades and place your trade with proper money management. Never think that you will always have to wine trade. Be prepared to accept the losing trades. Last but not the least always trade the market based on the analytical result.