Don't Lose your money in Forex Trading -
Experienced Forex brokers

Dated: 2016-10-08

This question is valid and not many investors probe into this question “Whether the forex brokers are really their friends? When you first enter this arena, you would have many questions for which you would require answers. The only valid person who would give you the right answer is the Forex broker. We have preconceived notions that Forex traders do not charge commission. This is a false notion. Therefore every broker would try and persuade his investor to do business; the reason being only if the trader invests the broker would earn money out of it.

Experienced Forex brokers

It is definitely true that brokers in securities and commodities transactions get commission, unlike Forex brokers. Forex brokers are middles of Forex and they earn their money through many other trading activities.

Purchasing/selling currencies

Holding currencies, converting currencies

Interest accrued by way of deposited funds

Rollover fees

The Forex broker earns his money from the difference in the bid price and ask price. Previously, only large financial institutions, banks and other investment companies used to deal in Forex trade. The internet has made it possible for even small time investors to try their luck in this business. Brokers are connected to an investment bank and this bank vouches for the loans which are used as leverage in trading. The brokers buy in lots from these financial institutions and sell them back to the investor at what is called the ‘ask price’.

The bid price is the price at which the investor can sell back the position to the broker. For example if the ask price is placed around 1.1920 and the bid price is around 1.1923. The difference is 0.0003 or what is normally referred to as 3 pips. The broker makes the 3 pips in the bargain from the transaction. This also means that the broker has not make any commission in this deal. The normal size lot is 100,000$.

Hence, if the broker is making money in the bargain from the transactions, the broker would advise that you can continue trading, sometimes they also advise on fixing the tight stop so that you do not end up making losses. Trading also takes place based on press releases, which might put you in a loss, so you need to be careful while taking tips based on news releases and bulletins. Like mentioned earlier, a good broker would advise you whether to go ahead with the trade or not. You could also gather tips from people who have been in this line of business. People with experience know the market well as compared to the releases in the press and bulletins.

It is equally true that a broker would advise his investor correctly, because after all he also would earn money in the bargain. Most of the brokers in this line of business are qualified and experienced and hence they give sound investment advice.