Broker FAQ

How do FCM/Brokers make their money?

Broker FCMs make their money from a portion of the pip spreads.

Some FCM/Brokers may also be in a position to make money through their trading desk. How this works is if the trading desk feels that your trade is a losing trade, they may opt to take the opposing side of the trade, meaning if you loose 20 pips on that trade, they made your 20 pips including your pip spread. For more information, click here.

What’s the real difference between Brokers? Aren’t they all the same?

Not all Brokers are created equal. The biggest difference that most traders experience is the pip spread and trading platform functionality. Click here for a Broker comparison.

I heard my broker might trade against me, is this true?

Yes, some Brokers actually trade against their customers through their trading desk. Please refer to “How do FCM/Brokers make their money” above.

Is there any advantage to opening a larger account over a smaller funded account?

The answer to this question is yes and no depending upon your trading strategy and risk level.
A larger account holder has more options to their trading than a smaller funded account holder. Here are a few examples:

     Ability to lower your leverage and reduce the amount of money that you could potentially
       lose on a bad trade. However keep in mind that the lower level of leverage also reduces        your  potential profit potential as well.

     Flexibility to position trade and hold trades open for longer periods of time and ride out
       the smaller movements of the market. However this means that you must be willing to        potentially take larger losses if the market doesn’t move in a positive direction.

Why shouldn’t I go directly through the Broker?

Going through an IB versus directly to a Broker FCM has many advantages to make you a
better traded as well as potential cost savings. Click here to learn more about an IB vs FCM