MoneyTec 2.0 - Online Forex Traders & Brokers Social Networking Community » Trading Talk » Beginners Forum

[cyberwave]

Dear members,.. this is my first post here,..i'd like to thank you all for this great website,..i just had some questions regarding the FX market and hope to find some answers for

1-) Where do brokers make money from ? I have a friend who worked in a forex company,...he told me the spread is barely enough to cover costs for putting in my order,..so how do these companies actually really make money ?


2-) Does anyone here make regulary 20 pips daily or more ? if so why you are not a millionaire from fx market ? because u should be in 6 months period if u started with $5000 with a risk management of 10% loss on each trade,..is it really that hard to stop looking at pip value and look only at pips ?

3-) I read manuals from 2002 saying the best pair is USD/CHF cause of its highest day range among the pairs and the sustainability of its trend,..does this still apply to that pair among the other pairs ?

thanks in advance and happy trading everyone

[elmagd2000]

Welcome to Moneytec. . . In reply,
1- brokers make money in spreads. Furthermore, any order must be offseted by inverted one so, at any level of price if there is a client opening a buy order and at same level another one is opening a sell order then, broker gets 2 spreads. If, there is a buy order with unmatched inverted order from clients base, broker in this case must offset the client's order by inverted order. If client is losing (which is the case with most traders ) then for sure the broker is winning. So this another way the broker makes money.

2-Yes, you can make 20 pips daily. 10% risk per trade is risky in general. why? caz 5 consequent losses means 50% drawdown however, money management variables have to be studied all together.

3- Your system and trading model determine the best pair. There is no absolute facts here. In terms of daily range or volatility many pairs like Gbp/Usd and Gbp/Chf may in longer terms exceed Usd/Chf

Good luck,
Hani

[cyberwave]

Originally Posted by elmagd2000

Welcome to Moneytec. . . In reply,
1- brokers make money in spreads. Furthermore, any order must be offseted by inverted one so, at any level of price if there is a client opening a buy order and at same level another one is opening a sell order then, broker gets 2 spreads. If, there is a buy order with unmatched inverted order from clients base, broker in this case must offset the client's order by inverted order. If client is losing (which is the case with most traders ) then for sure the broker is winning. So this another way the broker makes money.

2-Yes, you can make 20 pips daily. 10% risk per trade is risky in general. why? caz 5 consequent losses means 50% drawdown however, money management variables have to be studied all together.

3- Your system and trading model determine the best pair. There is no absolute facts here. In terms of daily range or volatility many pairs like Gbp/Usd and Gbp/Chf may in longer terms exceed Usd/Chf

Good luck,
Hani

Hello again Hani,.. :-)

Thanks for your insights,..in reply to you and all board members interested in reading this thread

1-) I did hear that a major way brokers make money..is they never close a position when you tell 'em to,...they keep it open on there behalf and take the position for themselves after u close it untill they make money from it,..if you already lost on that position a lot of money,..it means they will only have to wait little longer with minimal risk till it bounces again on there direction....

2-) If it is easy to make 20 pips a day...did anyone really make millions by increasing the number of lots within 6 months period or 1 year ? i am talking about traders here available for chat,..not the very successfully traders who sell whatever comes out of there mouth online .. xan the average trader do that ? the system i use although it allows a 10% risk on paper,..it really never exceeeds 5 % which is reasonable to a bit large percent,...

Happy trading Hani

[elmagd2000]

CW, If you think broker do so, why not to do the same?!
I believe no one in market can guarantee 100% a move in certain direction even the broker. There are odds or high probabilities but not facts . . . Volume of Forex market make it tougher to manipulate unlike other markets.

I didn't say it is easy to make 20 pips daily but said you can. Compounding in any specualtive market can increase profits drastically. Same applies to increase of risk factors. All depends on your system analysis.

Hani