What do Forex brokers earn?
Any novice trader who chooses an intermediary with whom he will trade, is interested in the question, what do forex brokers earn? The answer is simple - when a trader makes transactions, then regardless of whether they were profitable or not, he gives part of the money from each trading operation to a broker. Spread is the number of points that you have to give to the broker as a commission. You can familiarize yourself with the volume of the commission on trading instruments on the broker's website.
Choosing a forex broker is not a matter of haste, for a start it is worth familiarizing yourself with the amount of commissions of several companies, reading reviews about brokers. You can choose not only lower commissions, but also the possibility of returning the spread. This can be done by opening an account with an official representative of the broker or partner. The partner who attracted the client receives a reward from the broker and returns part of the money spent on the spread to the trader. In this chain, everyone wins. Ratings, or tops, forex brokers will help you make the right choice, which are compiled on the basis of reviews and opinions of not only experts, but also ordinary traders.
Brilliant broker service - leverage
Speaking about what brokers earn, it is necessary to mention margin trading. Leverage is a classic operation of any bank (lending, in which securities act as a pledge).
Example. You have highly liquid shares that the broker can sell at any time. He offers you a loan of $ 100,000 and if the value of the shares increases by 30%, you will receive $ 30,000 and the same amount using a loan. Less interest.
It is tempting, but if the shares fall by 30%, you lose twice 30,000 and interest. Out of 100,000, less than 40,000 remain. The broker's earnings will increase significantly. If the leverage is 1: 2 and you have $ 100,000, the broker will give another 200,000. If the market movement is unfavorable by 50%, you will lose your money and the brokerage commission will double.
Another brokerage service is short
Short sales - this is another brilliant brokerage service, which brings him a good profit.
Example. You think that in the near future the price of certain shares will decrease. So you will sell. But the broker will teach that you need to earn not only on growth, but also on the fall and will offer to lend these shares for a while.
You will sell them, and when the price drops, buy cheaper. Your winnings are the difference with which the broker will surely take a percentage. But if you make a mistake and the shares will not fall, but grow, in order to repay the debt you will have to buy more. Your money will be the security of the loan.