How do forex brokers make money header

Forex Broker Fees To Consider

To answer the question of how do forex brokers make money, we have to understand the business models of forex brokers and what this means for each style of account. We go over the types of forex brokers and then the three key ways a forex broker makes their money. Quickly jump to each topic using the shortcuts below:

    1. ECN Brokers v Market Makers – Types of forex brokers
    2. Spreads – The difference between a currency pair’s bid price and ask price
    3. Commissions – A set fee charged by ECN forex brokers based on volume
    4. Other Fees – Deposit/withdrawal fees, inactivity, and premium features

Why Understand How Forex Brokers Make Money?

To choose the right forex broker for you, it’s imperative that you’re able to understand how forex brokers make money.

While most forex brokers have a few common charges that you’re going to need to become familiar with, we dive a little deeper to help you fully understand the relationship between forex trader and forex broker.

To become a consistently profitable forex trader, you’re going to have to understand where your money is going. We’re here to help you choose the best forex broker and trading account type, for your own trading style.

Broker Reviewed

Pepperstone
Interactive Brokers
eToro
IG
City Index
Our Rating
9.17
8.17
7.17
6.67
6.83
71.4% of retail CFD accounts lose money
CFD + Stockbroker
62% of retail CFD accounts lose money
75% of retail CFD accounts lose money
72% of retail CFD accounts lose money

Regulations and Licenses

Feature
Pepperstone
Interactive Brokers
eToro
IG
City Index
FCA (UK)

Brokerage

Feature
Pepperstone
Interactive Brokers
eToro
IG
City Index
EUR/USD Avg. Raw Spread
0.13
0.17
GBP/USD Avg. Raw Spread
0.51
0.6
AUD/USD Avg. Raw Spread
0.18
0.3
EUR/USD Standard Spread
1.13
3.0
0.7
0.8
EUR/USD Fixed Spreads
3.0
Commissions (USD Base)
GBP £2.295 Side Trip (MetaTrader)
USD $1mil = 0.20% (IBKR)
Commission Rebates
Minimum Deposit
GBP £200
$0
USD $200
Has Islamic Account
No Inactivity Fees
Funding Methods
3
4
6
4
6
No Funding Fees

Markets and Instruments

Feature
Pepperstone
Interactive Brokers
eToro
IG
City Index
Currency Pairs
61+
115+
47+
80+
84+
Cryptocurrency CFDs
5+
98+
5+
5+
Index CFDs
14+
26+
13+
34+
21+
Share CFDs
60+
1000+
2000+
12000+
4500+
Commodities CFD
15+
12+
38+
29+
Stockbroking
50,000+
2000+
Retail Max. Leverage
30:1
33:1
30:1
30:1
20:1
Professional Leverage
500:1
400:1
200:1
400:1

Trading Platforms + Tools

Feature
Pepperstone
Interactive Brokers
eToro
IG
City Index
MetaTrader 4 (MT4)
MetaTrader 5 (MT5)
cTrader
Proprietary Platform
Automated Trading
MetaTrader 4 only
MT4 only
Social + Copy Trading
Standard Stop Loss
Guaranteed Stop Loss
Guaranteed Neg Protection
ESMA regulated territories only
Demo Account
Unique Feature 1
Commission rebates for active traders
125 Markets, 31 Countries, 22 Currencies
CopyTrader functionality for automated trading
Guaranteed stop loss orders
Best for beginners
Unique Feature 2
Award Winning Customer Support
Earn interest on idle cash balances automatically
Social trading interface across CFDs

Overall