How Much Do Forex Brokers Make a Day?

How Much Do Forex Brokers Make a Day?

A few new Forex brokers step into the business regularly. Commencing a Forex brokerage firm attracts many entrepreneurs as the business seems very lucrative. Here comes the big question – how much does a Forex broker make?

ECN/STP and Market Maker are the two types of Forex brokers that you usually come across. However, the income of brokers accepting US clients may vary due to their different operating protocol.

Market Maker Brokers

The market maker broker isn’t known for routing the orders of a trader to the market of real currency. It retains the trade and makes the trading market. That’s the reason why these brokers are known as the market maker. If you opt for a market maker broker and lose while trading, then you’re losing it to your broker and you need to allow him to claim the money. On the other hand, if you win, the broker needs to remit the profit that you earn.

Thus, there are chances that a trader may lose his key income source for the market maker broker since over 90% of all retail trade participants keep on losing and shedding their accounts on several occasions before they either earn profits or give up. Client losses as you can see are a substantial source of income for the market maker broker.

Market Maker brokers have another source of income by way of the swap and spread charges. Managing and running a Forex brokerage even involves a hefty sum. A brokerage team can achieve the MT4 license by paying a monthly fee of $1,500 and a one-time charge of $100,000. This is very important as they need to maintain separate in-house teams for sales, tech support, marketing, compliance, and accounting. They might need to incorporate several plug-ins and apps that come for an extra cost. They must also deposit a large sum of money as collateral and guarantee with their banks if they wish to be regulated. Apart from that, they must also make constant payments to the compliance team for following up with the authorities.

ECN Brokers

Compared to the market maker broker, the ECN broker earns a much lower amount and the nature of their work is technically more complicated. However, their business is considered to be much safer as they don’t get affected by portfolio traders that enjoy a uniform earning. The ECN brokers are known to earn a legitimate commission worth up to $20 per lot.

If the ECN broker can gather a good number of clients, then he can earn a reasonable amount through his trading business. The ECN brokers bear much lower expenses that the market maker brokers as they don’t need to hire so many employees. They may even arrange for the smooth running of their platform servers by paying a flat fee to some third-party hosting provider.

Bottom-Line

The Forex brokers run a profitable business even when their income varies every year. You must do your research and find out when and how to begin and promote your business. Throughout the entire period for which you can’t cover your expenses, you must acquire a capital fund for thriving and promoting your business.