## The Short Answer Forex brokers earn primarily through the spread — the small gap between the bid and ask price — plus trading commissions charged on every order. Each time you open a position you effectively pay the spread, which is the broker's built-in markup, and on some accounts a fixed commission per lot instead. Raw-spread brokers advertise near-zero spreads but charge roughly two to seven dollars per lot round-turn. A smaller group of brokers also acts as the counterparty to client trades, profiting when those traders lose money. Knowing which model your broker uses tells you the true cost of every trade.

## How the Spread Becomes Broker Revenue The spread is measured in pips: if EUR/USD is quoted with a bid of 1.0850 and an ask of 1.0852, that two-pip gap is collected by the broker the instant your order fills. You begin every trade slightly underwater, and only price movement beyond the spread turns your position profitable. Spreads widen during major news releases and thin liquidity hours, raising your cost exactly when volatility peaks. For scalpers and day traders this cost compounds across dozens of daily trades, which is why comparing pip values and spread costs across brokers is essential before you fund an account.

## How Commissions Work on Raw-Spread Accounts Commission accounts strip the markup out of the spread, showing near-raw prices, then charge a flat fee per lot — commonly two to seven dollars round-turn. A five-dollar commission on a standard lot equals roughly half a pip on EUR/USD, so the all-in cost often undercuts standard accounts for active traders. Commissions are transparent: you see the exact fee before entering, and it never widens during news. Brokers favor this model for high-volume clients, since revenue scales with activity. Always compare the combined spread-plus-commission figure, and factor in how leverage multiplies those costs on larger position sizes.

## Market Makers and the Third Revenue Stream Some brokers act as market makers, taking the opposite side of your trade instead of routing it to liquidity providers. In this B-book model your loss becomes their profit — and your gain their loss — creating an obvious conflict of interest. Reputable market makers hedge their aggregate exposure in the real market, but less scrupulous ones may widen spreads, delay fills, or hunt stop-losses during volatility. Warning signs include frequent requotes, platform freezes around news events, and withdrawal obstacles. If you trade with a market maker, choose one regulated by a top-tier authority and verify its execution statistics before depositing any funds.

## Frequently Asked Questions **Do zero-spread brokers really charge nothing?** No — zero-spread accounts charge a commission per lot instead, so your all-in cost is the commission plus any tiny residual spread. Always compare total costs, not marketing labels, before choosing an account type. **Are commissions cheaper than wider spreads?** For active traders, usually yes: a fixed commission is predictable and often lower than a marked-up spread, especially during news releases when spreads widen sharply. **How can I calculate what my broker earns from my trading?** Review your trade history, add the spread cost to the commission column per lot, then compare that figure against two or three competing brokers.