2nd July 2018 at 11:46 am #593
How many times have you thought of your broker? It is not much but if you have one question in your mind, we can tell that it is undoubtedly how they make money. The brokers offer us our trading services and they are very open-hearted as they seem. They will offer you any services and helps and when never you need them at free of cost. This is only free as long as you are investing your money with them. Most of the time, people think they are getting free services but they are being charged by their brokers. You may not have known that the brokers make money from each trade you place on the market. They do not know if you will win or lose and that is why it is best to take the money when you place. This is one of the brokers make money from traders. There are many ways and you will get to know them one by one in this article.
Majority of the new traders often thinks the broker is stealing their money. To be honest this statement is very true if you trade with the low-end broker. Due to this reason the rich investors in Forex market always trade with the professional broker like Saxo in order to get a fair trading environment. Unless you have access to the best possible trading environment, it will be really hard for you to do the technical analysis. Using the advanced trading tools, you can easily make a huge profit from the market.
The brokers have nothing to lose. They want you to trade more since so that they can earn money from commissions. Majority of the expert traders in the exchange traded funds community are long-term traders. If you carry your trade for more than one day, you are also subject to rollover charge or swap. But these things are often ignored by the experienced professionals. If you can determine the price movement of the financial asset, you can easily bear fees charged by your broker. No one has blown their account due to heavy fees imposed by the brokerage firm. Majority of the traders are losing money for their own actions.
Through the spread
One of the popular ways broker get to make money is through the spread. When you are trading the industry, your trade does not start form the position that you have opened. If you have not noticed it before do it when you are trading the market now. You will realize all the trades start from below your opening price. This is the money that is charged by brokers as fees to the traders. This is called spread and this is why you need to have a favorable trend to make money. There are two types of spreads offered by the brokers. One is the fixed spread and another is the variable spread. The variable spread charges the same amount of money depending on the trends. If the market is volatile and the price is changing fast, the spread gets higher. The fixed spread stays the same in all conditions and you can trade the market worry free when using fixed spread. These two types of spreads are the most popular ways you get to make your money.
Through third party offers
The brokers do not make money only through the spread but they also offer any third-party apps on their platforms. They receive a small commission for each of these even if you do not use them. Many third parties try to attract the traders to their blogs and the brokers advertise their offers.
Through their own trading
Even the broker also trades the market just like we do. Their trading is much bigger and they have a huge amount of money in their account. They not only manage the trades but also place trades for them to make their own profit through trading the market.
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