I'm actually still learning how forex trading work and I'm taking my son to learn everything that is supposed to be learnt on mate because she's going to be very helpful in the future.
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I know spread is the difference between the bid and ask price.Spread is the income of a broker, have being wondering how a broker generate his or her own income on spread, but from a tactical point of view how does a broker generate his own profit. So is it from the trader income. Moroever my question is how does a forex broker generate his spread
That's very correct and you've done well in breaking it down in layman's language. These are some things that newbies don't understand and majority don't want to take their time. They just want to earn nowI am not really well-versed with forex trading but with the term spread what I understand is the difference in value when it comes to selling or buying. For example you buy the Japanese yen which is 150 in your currency. When you sell it at 160 then the spread is 10 of your currency. From that spread the broker earns a commission. Correct me if I am wrong in this understanding but I learned that from a friend who is into forex trading for a long time.
That is actually where the broker usually gets his profits from in the trading market.The spread is a fee charged by the broker, which is the difference between the selling price (bid) and the buying value (ask). This spread is the income earned by the broker where when we sell, the spread will be charged between 2 points to tens of points depending on the pair used. Because when you make the transaction, the broker also has to pay the value of this spread to the international currency market.