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How do Forex Brokers make money?

How do Forex Brokers make money?

Postby edom » Mon Apr 22, 2013 3:29 pm

I have created a demo account and have been gaining money, I feel like this could be for me.
I'm worried that with a live account the Forex Broker wont allow me to gain the same way (using indicators).
I herd that forex brokers make money with the spread but how is that possible when they offer leverage of x100 or more? Doesn't that mean they are risking loosing $100 for every $1 that I loose?
The only thing I can think of is that the losers just loose all there money (loosing the brokers lots as well) meanwhile the winners go on to win, and continue to trade, out winning the losers?
edom
 
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Joined: Wed Oct 03, 2012 6:42 pm

How do Forex Brokers make money?

Postby sigwalt » Mon Apr 22, 2013 3:53 pm

First off: Never use paper (demo) trading as any indicator of how you'll do... especially with Forex since demo accounts don't (can't) take into account the lack of liquidity many times in that market.

The broker doesn't risk anything..... so I don't understand your question. In fact, in retail trading many of the brokers trade against their clients. Since most retail clients lose money..... that's a fairly safe "bet" for the broker. And yes...... there is plenty of money to be made on the "spread".

Read 6-12 books on trading and another 2-3 on Forex Trading. Once you've done this you stand a better chance of lasting 6-12 months.
sigwalt
 
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Joined: Mon Oct 29, 2012 9:41 pm


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