How Forex Brokers Make Money: Spread, Swap, Commission Explained

Last updated: July 5, 2026 · By: Tim Morris, founder of ForexMt4Indicators.com

Forex brokers make money four ways: the spread (a markup on the raw bid-ask gap), commission (a flat per-lot fee on raw or ECN accounts), swap (a markup on the overnight rollover), and — for many retail brokers — taking the other side of losing trades (the B-book). A raw-spread account might charge $7 per standard lot round-turn.

The diagram above traces one EUR/USD trade from your click to the broker’s revenue, splitting the cost into spread, commission, and swap, then branching into who takes the other side. The rest of this guide turns that flow into checks you can run before you fund an account.

If you are new to how a quote is even built, our forex spread guide breaks down the bid-ask gap that funds most of what you are about to read; this article zooms out to the whole broker business model.

How does the spread make a broker money?

Every price your broker shows has two numbers: the bid (where you sell) and the ask (where you buy). The gap between them is the spread, and it is the most common way a broker earns.

Here is the part most traders miss. Your broker rarely creates the raw price. It receives a raw spread from its liquidity providers — banks and non-bank market makers — then adds a markup before showing it to you.

On a “standard” or “commission-free” account, the broker’s entire fee is baked into that markup. If the raw EUR/USD spread is 0.2 pips and you see 1.2 pips, the broker keeps roughly 1 pip. On a 0.10 lot, 1 pip is about $1; on a standard lot, about $10.

The word “commission-free” is doing a lot of work in broker marketing. There is always a cost — it is only hidden inside a wider spread instead of shown as a separate line. A tighter forex spread on the same pair almost always means a smaller markup, which is why comparing raw spreads across brokers matters.

What is a commission and which accounts charge it?

Raw-spread, ECN, and “zero” accounts flip the model. They pass through a near-raw spread — sometimes 0.0 to 0.3 pips on EUR/USD — and charge a separate, visible commission per lot instead.

A typical commission is $3 to $3.50 per side, per standard lot — so $6 to $7 round-turn (open plus close). That number is the same whether the trade wins or loses, which is why it is easier to compare across brokers than a spread that flickers.

The trap is treating “raw 0.0 spread” as free. On a raw account you pay the tiny spread plus commission; on a standard account you pay a wider spread and no commission. For an active scalper the raw account usually wins; for someone placing two swing trades a week the difference is often small.

Do the full-cost math before you pick. A raw account showing 0.1 pips plus $7 round-turn costs about $8 per standard lot on EUR/USD; a standard account at 1.2 pips costs about $12. On a micro 0.01 lot those numbers shrink 100x, but the ranking usually holds.

How does swap (overnight financing) pay the broker?

Swap, or rollover, is the interest adjustment applied when you hold a position past the daily rollover (usually 22:00 GMT). It comes from the interest-rate gap between the two currencies in the pair — but the broker keeps a cut.

The raw swap is set by rate differentials in the interbank market. Your broker then adds a financing markup, so the swap you are credited is a little worse, and the swap you are charged is a little more negative, than the pure rate math implies. That spread is broker revenue that compounds every night you hold.

This is why carry trades rarely pay what the headline rate gap suggests. If two currencies have a 4% annual rate gap, the broker’s markup can quietly eat a chunk of that “free” carry. Our forex swap guide walks through how the credit and debit are calculated.

Weekend swap is another quiet earner. Because markets are closed Saturday and Sunday but interest still accrues, most brokers charge triple swap on Wednesday (or sometimes Friday). Hold a negative-swap position over that day and you pay three nights at once.

Before you hold anything overnight, check the swap on both directions with a swap calculator. Many pairs charge negative swap on both the long and the short side once the broker’s markup is applied — meaning there is no “free” carry direction at all.

A-book vs B-book: does your broker want you to lose?

This is the distinction that decides whether your broker’s interests line up with yours. It splits into two execution models: A-book and B-book.

An A-book broker (STP or ECN) passes your order straight through to liquidity providers. It does not take the other side of your trade. It makes money on spread markup and commission regardless of whether you win or lose — so it wants volume, not your losses.

A B-book broker (dealing desk or market maker) takes the other side of your order internally. It does not send your trade to the market. When you lose, the broker keeps your loss as revenue; when you win, the broker pays you from its own book.

The B-book model is not automatically a scam — it is how many regulated brokers profit on small retail flow, and it can mean tighter spreads because there is no liquidity-provider fee. The conflict appears with losing retail flow: a pure B-book broker profits directly when its clients lose, which creates an incentive around execution quality, requotes, and how aggressively stops get hit.

Most large brokers run a hybrid model. They A-book profitable or large clients (passing that risk to the market) and B-book the rest. You usually cannot see which book you are in — but you can read the tells: sudden slippage against you, frequent requotes on entries, and spreads that widen unusually around your stops are all worth logging.

Why do some brokers requote or slip your fills?

A requote happens when you click to trade at one price and the broker responds “price has moved — accept the new one?” instead of filling you. It is far more common on dealing-desk (B-book) execution than on true ECN.

Slippage is the related cousin: your order fills, but at a worse (or occasionally better) price than you clicked. Some slippage is honest — during news spikes the market genuinely gaps, and no broker can fill you at a price that no longer exists.

The concern is asymmetric slippage: fills that are consistently worse for you and rarely better. On an A-book venue, positive and negative slippage should roughly balance over time. Persistent one-way slippage is a red flag worth checking against your trade log. Our forex slippage guide explains how to measure it on your own account.

The practical test: place the same order type across two brokers during a quiet session and again during a news release. Log the requote rate and the fill quality. Execution behaviour under stress tells you more than any marketing page.

How to vet a forex broker before you fund it

You cannot verify a broker’s book directly, but you can stack enough signals to make a smart choice. Run these five checks in order.

1. Regulation first. A broker regulated by a serious authority (FCA in the UK, ASIC in Australia, CySEC in Cyprus, FSCA in South Africa) has client-money rules and a complaints process. An unregulated offshore entity has neither. Brokers common with our readers — Exness, IC Markets, Pepperstone, FBS, Deriv — publish their license numbers; verify the number on the regulator’s own website, not the broker’s.

2. Pick the account type that fits your style. Scalpers and high-frequency traders want a raw/ECN account (tiny spread plus visible commission). Occasional swing traders are often fine on a standard account. Match the cost structure to how often you actually trade.

3. Demand spread transparency. A broker that publishes live average spreads per pair — and separates spread from commission — is easier to trust than one advertising only “from 0.0 pips” with an asterisk. Compare real, all-in costs, not headline numbers, with a spread comparison tool.

4. Check the withdrawal reputation. The single most telling signal is how easily traders get their money out. Search the broker name with “withdrawal” and read recent, specific complaints — not star ratings. Deposit friction is fine; withdrawal friction is the warning sign.

5. Test execution on a live micro account. A demo runs on a different price feed and never shows real slippage. Fund a small live account, trade micro 0.01 lots, and log requotes and fills for two weeks before committing size. If you are still deciding, our demo vs live account guide covers why the two feeds behave differently.

A-book vs B-book at a glance

This table is the fastest way to see where your broker’s incentives sit. Read it before you sign up, not after a suspicious fill.

	A-book (STP / ECN)	B-book (dealing desk / market maker)
Who takes the other side	Liquidity providers	The broker itself
Broker profits when	You trade (volume)	You lose
Revenue source	Spread markup + commission	Client losses + spread
Conflict of interest	Low — aligned with volume	Higher on losing retail flow
Typical spreads	Raw + commission	Often tighter, no commission
Requote frequency	Low (true ECN)	Higher on dealing desks
Best for	Scalpers, active traders	Some regulated retail flow

The honest takeaway: neither model is inherently good or evil. A regulated B-book broker with clean execution can be perfectly fine, and an “ECN” label with no regulation behind it means nothing. Regulation plus withdrawal reputation matter more than the book type printed on the website.

What about gold (XAU/USD)?

Gold is where broker markups quietly balloon, and most traders never check. On XAU/USD the spread and swap both carry a bigger cut than on EUR/USD.

A EUR/USD spread might be 0.2 pips raw. A gold spread is often 15 to 35 pips — where 1 gold pip is a $0.01 move worth $1 per pip per standard lot (100 oz). That 15-35 pip spread is $15 to $35 per standard lot, every entry, before commission.

Gold swap is worse still. Because of how gold financing works, many brokers charge negative swap on both the long and the short side once their markup is applied — so holding gold overnight in either direction bleeds financing.

Before you swing-trade gold, check the gold spread and both-side swaps specifically. The broker edge that looks small on EUR/USD compounds fast on XAU/USD, especially if you hold across a triple-swap day.

Common mistakes traders make with broker costs

1. Chasing “0.0 spread” while ignoring commission. A 0.0 pip raw account still charges $6 to $7 round-turn per standard lot. Fix: always add spread plus commission into one all-in cost per lot before comparing brokers.

2. Ignoring swap on carry and swing trades. A trade held for a week can pay more in swap than in spread, especially on gold or high-rate pairs. Fix: check both-side swap with a swap calculator before holding anything past the daily rollover.

3. Trusting an unregulated broker because the spreads look tight. Tight spreads on an offshore, unlicensed broker are worthless if you cannot withdraw. Fix: verify the license number on the regulator’s own site first; treat “regulated by” claims as unverified until you do.

4. Believing “commission-free” means free. Commission-free accounts hide the cost inside a wider spread markup. Fix: compare the standard account’s spread against the raw account’s spread-plus-commission on the same pair.

5. Blaming the broker for honest news slippage. During NFP or CPI, real gaps mean no broker can fill a price that no longer exists. Fix: separate honest news slippage from persistent one-way slippage in quiet sessions — only the second is a red flag.

6. Never testing execution on real money. A demo feed hides the slippage and requotes that only appear on a live book. Fix: run a micro live account for two weeks and log fills before scaling up.

Broker costs vs the profit factor you actually need

Traders coming from other markets underestimate how much broker cost changes the edge a strategy needs. The relationship is worth settling early.

	Low-cost broker (raw + fair commission)	High-cost broker (wide spread markup)
Cost per EUR/USD standard lot	~$8 all-in	~$14 all-in
Edge a scalper needs	Smaller — cost eats less of each target	Larger — cost eats a bigger slice
Impact on a 10-pip scalp	~0.8 pip of cost	~1.4 pips of cost
Impact on a 200-pip swing	Negligible	Small but real
Where it bites hardest	High-frequency and gold	Every active strategy

The takeaway is scale-dependent. If you place two swing trades a week, an extra pip of markup barely moves your bottom line. If you scalp EUR/USD or trade gold intraday, that same markup can be the difference between a profitable system and a break-even one. Match the broker’s cost model to your trading frequency, not to its marketing.

The same logic applies when you compare asset classes; our forex vs stocks guide covers how forex’s spread-based cost differs from a stock broker’s flat commission.

Frequently asked questions

How do forex brokers make money if there is no commission?

Commission-free brokers earn through the spread markup. They receive a raw bid-ask spread from liquidity providers, then widen it before showing it to you and keep the difference. Many also run a B-book, taking the other side of losing client trades. “Commission-free” never means cost-free — the cost is only hidden inside a wider spread.

What is the difference between an A-book and B-book broker?

An A-book (STP/ECN) broker passes your order to liquidity providers and profits from spread and commission regardless of whether you win. A B-book (dealing desk) broker takes the other side internally and profits when you lose. B-book is not automatically a scam, but it creates a conflict of interest on losing retail flow, especially around execution quality.

Is a raw-spread account cheaper than a standard account?

It depends on how often you trade. A raw account charges a tiny spread plus a visible commission (around $6 to $7 round-turn per standard lot); a standard account charges a wider spread and no commission. For active scalpers, raw usually wins. For someone placing a couple of swing trades a week, the all-in difference is often small.

Why does my broker charge swap even when rates favour my trade?

Because the broker adds a financing markup to the raw rollover. The interbank swap comes from the interest-rate gap between the two currencies, but your broker keeps a cut on top — making credits smaller and debits larger. On some pairs, and often on gold, the markup means you pay negative swap on both the long and short side.

How do I know if my forex broker is legit?

Verify its license number on the regulator’s own website (FCA, ASIC, CySEC, FSCA), not on the broker’s marketing page. Then check the withdrawal reputation by searching recent, specific complaints. Deposit friction is normal; withdrawal friction is the warning sign. Regulation plus a clean withdrawal record matter more than tight advertised spreads.

Why does gold cost more to trade than EUR/USD?

Broker markups on both spread and swap are larger on XAU/USD. A gold spread often runs 15 to 35 pips (at $1 per pip per standard lot, that is $15 to $35 per entry) versus a fraction of a pip on EUR/USD. Gold swap is frequently negative on both sides. Always check the gold spread and both-side swap before holding.

What is a requote and why does it happen?

A requote is when the broker rejects your click and asks you to accept a new price instead of filling you. It is far more common on dealing-desk (B-book) execution than on true ECN. Some requotes are honest during fast markets, but frequent requotes in quiet sessions suggest an execution model that is not passing your orders straight through.

Does slippage mean my broker is cheating me?

Not necessarily. Honest slippage happens when the market genuinely gaps during news — no broker can fill a price that no longer exists. The red flag is asymmetric slippage: fills consistently worse for you and rarely better, in normal conditions. On a fair venue, positive and negative slippage should roughly balance over time.

Glossary of related terms

• Spread — the bid-ask gap; the broker’s most common revenue source, often carrying a markup over the raw price.
• Raw spread — the near-zero spread a broker receives from liquidity providers before adding markup.
• Commission — a flat per-lot fee (around $6 to $7 round-turn per standard lot) charged on raw/ECN accounts instead of a wide spread.
• Swap — the overnight financing adjustment; the broker keeps a markup on the raw rollover.
• A-book — execution model where the broker passes orders to liquidity providers; aligned with client volume.
• B-book — execution model where the broker takes the other side internally; profits when clients lose.
• Slippage — the difference between your expected and actual fill price.
• Requote — a broker asking you to accept a new price instead of filling your original order.

Related reading

• What is spread in forex?
• What is swap in forex?
• Demo vs live account
• Currency pairs explained

Risk disclaimer: Forex and CFD trading carries a high level of risk and may not be suitable for all traders. The strategies and indicators described here are educational. Past performance does not guarantee future results. Test on a demo account before risking real capital.

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