At first you may think that I am crazy :D
Why would I want to pick a broker that charges commissions over a broker that has only spread with no commissions? Let’s discover the answer to this question together.Forex brokers are not charities. Their purpose is to make money. There are two ways brokers can make money.
First is to charge commission. Second is to collect spread.
Charging commission is the only honest way a broker can make money. If the broker does not charge commission, that means they are making money from spread.
It should be impossible for forex broker to make money from spread in natural and honest forex trading environment.
The purpose of a forex broker should be to connect traders and banks. The purpose of the traders and banks is to compete with one another for best possible price.
That competition is what determines spread in real trading environment.
The only way forex brokers can make money on spread is if they set their own “fixed” spread or add “extra” spread to natural spread. In either case it means manipulation of price.
There is only one party that can have control over prices. It’s either the traders or it’s the broker.
When traders control the prices, there is honest environment of supply and demand.
When broker controls the prices, there is dishonest and artificial manipulation that is the root of many problems.
Manipulation of spread and prices is how most forex brokers screw their traders every day, and most traders don’t even know it. Most common way is to take out their stop/losses a lot more often than they should be taken out in normal trading environment.
But remember, many brokers that charge commissions also manipulate their spread, so they make money both ways.
