Your Questions About Forex Brokers
The following Question and Answer is brought to you by our Forex Consultant with interaction
from members of the Yahoo Answers community.
Mark asks…
how do forex brokers charge traders with pip spreads?
i know that the...
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Your Questions About Forex Brokers
The following Question and Answer is brought to you by our Forex Consultant with interaction
from members of the Yahoo Answers community.
Mark asks…
how do forex brokers charge traders with pip spreads?
i know that the less pip spreads a forex broker offers the better.
but why? how do they make
money by offering more or less pip spreads?
thanks in advance.
admin answers:
A “pip” is a fraction of a unit of currency.
For instance, the current level of the dollar versus the
British pound is $1.
9671 per pound.
The $0.
0001 is called a pip.
A forex broker will make a
quote $1.
9670 bid and $1.
9672 offered.
In this case, the spread is 2 pips (i.
e.
, $0.
0002).
If you
want to buy pounds, you must pay $1.
9672 dollars.
If you want to sell pounds, you will receive
$1.
9670.
1 / 2
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