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Many people trade with Forex brokers but they don't know how these brokerage firms make money. I know if you ask any Forex broker or stock broker, they will not tell you how they make money. The reason why these brokerage firms are popular is because they provide a powerful trading platform. These Forex trading platforms are divided into two i.e. the demo account and live account. The demo account enables you to practice Forex trading before going live and the live account is the real process of trading foreign currencies. Let's see how these brokerage firms make money on your behalf. From my own experience they use the below tactics to earn money; 1. Through Spread 2. Hedge Trading 3. Banning Profitable traders 4. Counter trading 5. Through Bid Price and offer price The above are some techniques that are used by these forex brokers. I did a research and I found out they are theReal Secrets that are being used by most brokerage firm. So let's discuss their meaning so that you can know more about them. a). Spread Spread is the difference between the bid price and the offer price of a particular trade. The price at which you could sell you profitable trade is the bid price and offer price is at which you could buy or trade thus leading to a profitable income. b) Hedge Trading Hedge is a position established in one market in an attempt to offset exposure to price changes in an opposite direction with the aim of reducing risk. Forex brokers accomplish this procedure with the help of insurance policies and option trading e.t.c
c) Barning Profitable traders Most scam Forex brokers tend to ban profitable traders. When they see that majority of their traders make super profits they will ban you and close your account. But this act is only experience to scam brokers but not to legitimate brokers. d) Counter Trading It's an international trade in which an exporter agrees to accept payments in form of good or services. The aim is to offset deals with the buyer. e) Bid price and offer price The price at which a broker will buy a specific quantity of a particular trade or stock, then the broker will sell a trade for a profit. The above secrets are some ideas that are used widely by most brokerage firms. Before you select a forex broker make sure you do a thorough independent review. If you want to trade forex with the best forex broker, then you should consider opening a free forex practice account that will help you learn how to do forex trading.
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