Peek How Forex Brokers Find Money
The position as a broker is considered very important in the world of forex. Brokers have the responsibility as a bridge between traders and the market. He is the one who manages your money while trading and many of his advice is used to assist you in determining trading decisions.
As a third party, of course you are curious where the broker gets profit. In the business world, profit is the main goal even in forex trading. Here is how brokers get profits in forex:
Sale and Purchase Difference
The most prominent advantage can be seen from the difference between buying and selling traders. The difference between buying and selling is determined by the broker himself and he can also benefit from the difference in currency exchange rates. If a trader experiences a loss then the broker actually benefits.This is because brokers do not need to pay the amount of profit earned by the forex trader.
Fee for services provided
A broker can also benefit from the services he gives to traders. More and more are using their services, of course, the benefits gained are also getting higher.Brokers also have their own operational costs that need to be paid to related parties. You could say the fee that he got did not necessarily enjoy himself.
Broker income is then obtained from the commission of each transaction. This advantage is often referred to as pips. For currencies such as US, Euro, Yen and Pound usually have a value of 2-3 pips. For secondary currency the value can reach 5 pips. You can imagine if a broker has more than 5 traders who also invest in various currencies . Of course the number of pips produced by a broker can be many times.
Before creating a broker account don’t forget to consider the following things so that your forex trading runs smoothly.
- Choose a broker who has an initial deposit so you are more flexible in trading. For brokers who already have names tend to set a large deposit. You can also withdraw this money deposit at any time but you should choose a broker that is flexible on a regulation basis. This will make it easier for you to adjust the requested deposit and ease of withdrawal and deposit.
- Don’t forget to choose the broker that has the lowest commission. A large brokerage commission will burden you to get high profits. Choose also those that have low spreads and swaps so that you quickly get a return on capital.
- A broker’s reputation needs to be considered. Do not let you be caught using an illegal broker – which then leads to fraud. Make sure the services and facilities provided by the broker are fast and 24 hours. Thanks to technological sophistication, there are now many online brokers that you can find anywhere and communicate at any time.
- Use online forex services to help you in selecting the right brokerage company.
Forex trading does offer high profits but also a high risk. This does not necessarily make you pessimistic to taste this online business. many traders start from housewives to entrepreneurs trying forex trading. If you have knowledge that is capable, the possibility of profit is no longer a dream.