This is a very good question and sadly not one that enough investors think to ask. After all, when anyone first enters into Forex trading there will always be a lot things that you dont know and your broker would seem to be the logical source of great informationright? Even the very notion of Forex trades being commission free is not actually accurate and it is therefore in the brokers best interest to convince any investor to trade because that is when the broker makes their money.
It is true that Forex brokers do not get paid the typical commissions found in securities or commodities transactions. Instead, these middlers of the Forex, make their money from a host of activities relating to a trade, including:
Buying/Selling currencies
Converting and holding currencies
Interest on deposited funds
Rollover fees
In short, the Forex broker makes money from the difference between the bid and ask price. There was a time when only banks, major currency dealers, and other big players were the only ones who play in the Forex. However, brokers are often associated or somehow linked with an investment bank that guarantees the loans used to...
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