Brokers in Forex

Akash Khanna - Brokers in Forex Partner & Managing Director

Written by Akash Khanna
Edited by Samuel Black
Fact-checked by Lisa Khan

Last Updated – 30 May 2025

How Forex Brokers Really Make Money (And What It Means for You)

Let’s not kid ourselves—forex brokers aren’t running community service projects. They’re here to make money. That flashy website, the sleek trading app, the “no deposit bonus”? Yeah, someone’s footing the bill—and spoiler alert: it’s probably you.

So, that begs the question every smart trader should ask:
“How exactly do forex brokers make money? And is it a problem for me?”

This guide pulls back the curtain on the business model of forex brokers—whether you’re just starting out or trying to figure out if your broker is making more than you are (hint: they usually are).

The 3 Main Ways Forex Brokers Make Money

Forex brokers typically earn money through three core channels:

  1. Spreads – the difference between bid and ask prices

  2. Commissions – direct charges per trade

  3. Fees – swap, withdrawal, inactivity and… “surprise” charges

Let’s break each one down, without the jargon and with examples that make sense.

Great for Beginners

Best Overall Forex Broker

Best App-Rated Broker

1. Spreads – The Broker’s Built-In Profit Margin

When you buy a currency pair like EUR/USD, you’ll notice something sneaky:
The price you buy at (ask) is slightly higher than the price you sell at (bid).

That difference? It’s called the spread.
And that tiny gap is where brokers quietly rake in profit—on every single trade.

Example:

  • Bid: 1.1048

  • Ask: 1.1050

  • Spread: 2 pips

If you trade one standard lot (100,000 units), and your broker charges a 2-pip spread, that’s about $20 earned by the broker—even before the trade moves in your favor.

The more trades you make, the more they make. It’s like a mini tollbooth on every transaction.

Types of Spreads:

Spread TypeDescriptionProsCons
FixedDoesn’t change with market volatilityPredictable costsUsually wider (less favorable)
VariableAdjusts with market activityTighter during quiet timesCan spike during news events
Raw SpreadNear-zero spread (often ECN)True market pricingTypically adds commission

2. Commissions – The Cleaner, Clearer Profit Model

Some brokers ditch (or reduce) the spread and instead charge a straight-up commission per trade.

Common with ECN or STP brokers, this model is often preferred by experienced traders because it’s transparent—you see exactly what you’re paying.

Example:

  • $3 commission per side

  • Trade 1 standard lot (buy + sell)

  • Total commission: $6

It sounds small, but with hundreds of trades, it adds up fast. Still, when paired with super-low raw spreads, commissions can actually be cheaper than trading with padded spreads.

3. Extra (Sometimes Sneaky) Fees

Here’s where brokers can start acting a little… less noble. These additional income streams aren’t always obvious, but they exist—and can quietly chip away at your capital.


a) Swap / Overnight Fees

Hold a position overnight? You might be charged or credited interest depending on the currency pair.

This fee is tied to interest rate differentials between currencies. The broker often adds a markup, earning a bit more than the actual rate difference.

  • Hold long on EUR/USD overnight → pay a swap fee

  • Hold short on USD/JPY → you might earn (a tiny) swap

Islamic (swap-free) accounts remove this, but watch out—some brokers replace swaps with mysterious “admin” fees.


b) Deposit & Withdrawal Fees

Good brokers won’t charge you to move your own money. Bad ones will.

Some brokers:

  • Charge for deposits via card or e-wallet

  • Mark up exchange rates when converting your funds

  • Add processing fees for withdrawals

Imagine making $50 in profit, only to lose $10 withdrawing it. Not ideal.


c) Inactivity Fees

Didn’t log in for a while? Welcome back—here’s a fine.

Brokers sometimes charge $5–$50/month for accounts that are inactive for 30–90 days. This is how some platforms profit from users who quit trading without closing their accounts.


d) Slippage and Requotes

This is less of a “fee” and more of a profit loophole.

  • You place a trade at 1.1050

  • It gets filled at 1.1053

  • That 3-pip difference = extra income for the broker or their liquidity partner

Reputable brokers will minimize this. Others will use it as a money-printing machine—especially during volatile news events.

Great for Beginners

Best Overall Forex Broker

Best App-Rated Broker

Do Forex Brokers Want You to Lose?

Let’s address the big elephant in the trading room.

Some brokers profit when you lose. Others don’t care. And knowing the difference matters.

There are two main broker models, and how they make money depends on which model they use:


A) Market Makers (Dealing Desk Brokers)

These brokers act as the counterparty to your trade.

  • You buy = they sell

  • You sell = they buy

What does this mean?
If you win, they lose. If you lose, they win.

Why they do it:
They keep all your losses and pay you out of their own pocket when you profit. It’s profitable when traders lose more than they win (which—statistically—most do).

Is it legal? Yes.
Is it a bit… conflicted? Also yes.

But not all market makers are evil. Reputable ones hedge their risk or match trades internally. Still, the financial motivation for your failure exists.


B) ECN / STP Brokers (No-Dealing Desk)

These brokers don’t take the opposite side of your trade.

Instead, they:

  • Route your trades to banks, institutions, or other traders

  • Make money from spreads and commissions only

  • Stay neutral whether you win or lose

Why it’s better:
There’s no conflict of interest. Your success doesn’t hurt their bottom line.

Who they’re ideal for:
Serious or long-term traders who want transparency and less manipulation.

So Which Forex Broker Type Should You Choose?

If you’re a beginner:
A market maker can be okay if they’re well-regulated and transparent.

If you’re serious long-term:
Go with an STP or ECN broker. It’s cleaner, more transparent, and your interests aren’t as “misaligned.”

Great for Beginners

Best Overall Forex Broker

Best App-Rated Broker

Broker Monetization Models Compared

Here’s a visual breakdown of how different brokers earn money:

Broker TypeMain Profit SourcesProfits From Your Losses?Ideal For
Market MakerSpread, swap, your lossesOften, yesBeginners, casual traders
STP BrokerSpread, markup, commissionsNoIntermediate traders
ECN BrokerRaw spread + commissionNoSerious traders & scalpers

Real-World Example: $1,000 Account – Who Earns What?

Let’s say you:

  • Trade 1 standard lot of EUR/USD

  • Your broker charges 1-pip spread (or $10), no commission

  • You win $50 on the trade

Your broker’s profit: $10 (from spread)
You keep: $50 (minus the $10 baked-in cost)

Now multiply this across hundreds of traders and thousands of trades every day—and you’ll understand how brokers can earn millions a month without ever touching your balance.

Red Flags That a Broker Is Over-Monetizing You (or Just Plain Dodgy)

Let’s face it—some brokers aren’t just trying to make money… they’re trying to milk traders like a cash cow.

Here are the warning signs that should make you hit the exit button faster than you exit a losing trade:


❌ 1. “Guaranteed Profits” or “Risk-Free Trading”

If a broker—or someone claiming to represent them—promises that you’ll make X% every week with zero risk, congratulations: you’ve just met a scammer.

Trading always involves risk. No exceptions. Anyone telling you otherwise is selling dreams… not trading platforms.


❌ 2. Bonuses with Ridiculous Withdrawal Conditions

Who doesn’t love a free bonus? The problem? Some brokers offer bonuses that come with chains attached.

Example:
You deposit $100, get a $50 bonus, and now you can’t withdraw any money until you trade 50 standard lots. That’s like running a marathon just to unlock your own wallet.

If the bonus terms are longer than your mobile contract—walk away.


❌ 3. Sluggish or Blocked Withdrawals

You request a withdrawal and suddenly… crickets.
Or worse, the broker demands “extra documents” or tries to convince you to reinvest instead.

Some common excuses include:

  • “Our finance team is reviewing your account.”

  • “You must complete more trades before withdrawing.”

  • “Due to high volume, your withdrawal will take 7–14 working days.”

In the real world, if your money’s good enough to deposit instantly, it should be fast to withdraw too.


❌ 4. Unregulated or Fake Regulation

If your broker proudly flashes a “regulation badge” from the Republic of Coconut Island, be suspicious.

Always verify the license on the regulator’s official website (ASIC, FCA, CySEC, etc.). If you can’t find it, or if the license number is recycled from another firm, you’re likely dealing with a clone or an outright scam.


❌ 5. Aggressive Sales Tactics or “Account Managers” Sliding into Your DMs

A real broker doesn’t cold-call you at dinner or WhatsApp you out of nowhere saying:

“Hello sir, I make people rich daily. Just send $200 and I’ll manage your account.”

No. Just no.
These “account managers” are often unlicensed affiliates who earn commission by convincing you to deposit more… and lose more.


❌ 6. Price Manipulation or Constant Requotes

If you’re seeing your trades trigger stop-losses at suspicious prices or you’re constantly getting “requotes” when the market isn’t even moving—guess what? That broker might be trading against you.

Good brokers don’t need to rig the game. Bad ones are the game.

FAQs – Quickfire, Clear, and Completely Honest

Let’s clear up some common questions traders ask once they realize brokers aren’t just smiling out of kindness.


Q1: Is it bad if my broker makes money when I lose?

A: Not necessarily—but it can be.
Market makers do profit from client losses, but reputable ones still offer fair conditions. The danger is when brokers manipulate trades (like widening spreads or delaying execution) to tilt the game in their favor.

If your broker profits only when you lose—and actively makes losing easier—run.


Q2: Do ECN or STP brokers guarantee better results?

A: No broker guarantees profits, but ECN/STP brokers are typically more transparent.
They route your trades directly to the market without taking the opposite side. You still need skill, but at least you’re not battling your broker.


Q3: Should I avoid all bonuses?

A: Not necessarily. Some brokers offer fair, optional bonuses with clear terms.
But always read the fine print. If accepting a bonus locks your account or forces excessive trading, it’s a trap dressed like a gift.


Q4: Can a broker stop me from withdrawing my money?

A: A regulated broker can’t stop you without a valid reason.
Delays may happen due to ID verification or anti-money laundering checks—but if they start inventing conditions after you request a withdrawal, you may have a problem.

Pro tip: Always test a small withdrawal early to see how the broker handles it.


Q5: Is it safer to go with a local broker in my country?

A: Sometimes yes, but not always.
A locally licensed broker is easier to complain about legally, but many top brokers operate internationally and are regulated in stricter jurisdictions like the UK or Australia.

Bottom line: Trust the regulation, not the accent or location.


Q6: What’s the best broker model for beginners?

A: For simplicity, beginners may find well-regulated market makers easier (lower deposits, fixed spreads).
But if you plan to trade seriously, grow your account, or scalp, ECN/STP brokers offer better long-term value and execution.


Q7: What if my broker doesn’t respond to support requests?

A: That’s a big red flag.
If support ghosts you during a basic inquiry, imagine what will happen when something really goes wrong. Always test their support before funding your account.


Q8: Do brokers ever lose money?

A: Yes. Market makers can lose when too many traders win. ECN/STP brokers might struggle during low volumes or high volatility.
But overall, the house usually wins—because they make money from volume, not whether you profit or not.

Forex Brokers Make Money—So Should You

Here’s the truth that no flashy trading ad will tell you:

Your broker is in business to make money.
Not to mentor you. Not to help you retire early. And definitely not to share in your losses like a sympathetic trading buddy.

But that’s okay. Because if you understand how they make money—you can trade smarter, protect yourself, and even use that knowledge to your advantage.


What This All Boils Down To:

  • Spreads and commissions are normal—just like paying a fee to access any service. But they should be reasonable, transparent, and easy to calculate.

  • Market makers aren’t evil—but if they start manipulating your trades or blocking withdrawals, it’s time to move on.

  • ECN/STP brokers may cost more upfront, but in the long run, they offer transparency and neutrality—ideal for serious traders.

  • Red flags matter—if you ignore them now, you’ll pay for it later.


The Broker Isn’t the Enemy—Ignorance Is

Most beginner traders lose money not because the broker is rigging the game—but because they don’t understand how the game is played.
The broker has a system. A model. A predictable way to earn.

So here’s your edge:
Know the broker’s business model better than they expect you to.
Use that knowledge to reduce costs, avoid traps, and stay in control of your capital.

Because once you understand where the broker is making their money,
—you’ll be in a much better position to start making yours.


One Last Rule to Remember:

If your broker makes more from your losses than your trades—you’re not a client, you’re a product.
And in this industry, the product always gets sold.

Choose wisely. Trade consciously. And never forget:
In forex, surviving long enough to learn is the first real profit.


Brought to you by BrokersinForex.com – where traders get the truth, not just the terms & conditions.


Great for Beginners

Best Overall Forex Broker

Best App-Rated Broker

How Do Forex Brokers Make Money