How the Broker Makes Money
Forex spread is the source of income of the brokers by which they make money in Forex Trading Market as we know each time you place the ordering broker will charge the Spread.
When you open a trade the number of pips automatically down that the broker is charging for the spread so you pay such spread to your mentioned broker.
If the Forex spread is 2 pips, when you open a trade, as a result you will be at a loss of 2 pips.
and that 2 pips will be calculated according to your contract size for example.
hence if you place 1 standard lot trade so you have to pay $20 to your broker.
Fixed Spread is those which is mostly provided by Dealing Desk (DD) Brokers means to fix in 2 or 3 even 15 pips.
Each currency Pair has a different spread they can range from 1 pip to 15 pips so far you have to pay With fixed spreads, you always know what will be paying.
Variable Forex Spread
It changes from second to second and this change in the spread has to do with the liquidity of providers at the time.
These brokers get feeds from all of them and the best prices go to you.
Maybe one question in mind which is the better one either Fixed or Variable so you depend on your broker choice.
mean which one you are choosing example DD or NDD or even in NDD may be ECN, STP, or DMA.
Bid / Ask Difference
The difference between Bid price and Ask price is a Forex Spread.
Every Forex broker has 2 set of prices while one set of prices if you want to buy into a position.
And another one if you want to sell into a position.
Basically, the Bank( Or broker or fund Manager) has to be opposite side of your trade If you Buy.
They have to Sell and you Sell, they have to Buy.
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