Traders and speculators can trade on the forex market through intermediaries. Like IC Markets brokers execute trades for their traders and speculators. Of course, their service will not be provided free of charge. Traders, do they make a profit, or do they suffer a loss due to commissions and fees? The following information explains the source of money obtained by Forex brokers like IC Markets. Forex brokers accept buy and sell orders and execute them. Since the forex market does not have a central exchange, FX brokers operate over-the-counter (OTC). So they have to remind traders to do due diligence, to ensure that the broker they work with doesn’t default. IC Markets and other brokers make money through commission per trade or spread. In the mean time, before we continue this topic, you can check out http://www.vixbrokers.com/minimumdeposit/icmarkets.html if you want to know the minimum deposit in IC Markets.
Let’s take the EUR / USD pair with Forex quotes at 1.1844 / 1.1847 as an example. The bid price here is 1.1844 and the asking price is 1.1847. This means that the broker in IC Markets is willing to buy EUR at the bid price of 1.1844, and is willing to sell EUR at the asking price of 1.1847.
In this example, the spread is equal to 3 pips in the broker’s pocket. Note that the broker can also charge its clients commissions and spreads for each trade.
Translated from the OnlineTradingAsia page Fixed spread, as the name suggests, does not change throughout the day regardless of market conditions. So, with fixed spreads, you’ll usually save money. It also gives you greater transparency as you will know exactly how much it costs per trade.
Meanwhile, variable spreads change throughout the day. Important news or economic events can drastically move variable spreads.
So in essence, the Forex market is a very competitive place and filled with aggressive brokers. Understanding how and where to source forex broker money can help you in choosing the right broker, like IC Markets. Before committing to a broker, we recommend that you do a little research on their rules and trading conditions.