What Is a Forex Broker? How Brokers Work, Make Money and Are Regulated

A forex broker (also called a forex brokerage, FX broker or foreign exchange broker) is the company that gives you access to the currency market. It opens your trading account, shows you buy and sell prices on a platform, executes your orders, holds your money and charges you for it. Because the broker sits between you and the market, the company you choose affects your costs, how your orders are filled, and what happens if there is a dispute or a withdrawal problem. This guide explains how online forex brokerages work, the dealing models they use, how they earn money, and how to check whether a broker is regulated.

Disclosure: OnForex may earn a referral commission from Exness links on this page. This page is a general explanation, not a ranking of brokers, and not investment advice.

This guide is for anyone who is choosing a broker for the first time, or who wants to understand what a broker label such as "ECN" or "market maker" really tells them. It covers:

• What a forex broker does
• Dealing models
• How brokers make money
• Regulation and how to check it
• Red flags
• How to compare brokers
• FAQ

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What does a forex broker do?

Forex has no single exchange. Banks and dealers trade currencies with each other electronically, and an individual cannot reach that market directly. A retail forex broker connects you to it. In practice the broker does five things:

1. Opens and runs your account after identity checks. See forex trading account.
2. Provides the platform, usually MetaTrader 4 or 5, a web terminal or its own app. See MT4 vs MT5.
3. Quotes prices (a bid and an ask for each pair) and decides the spread.
4. Executes your orders, either by passing them on or by taking the other side of the trade.
5. Holds client funds and processes deposits and withdrawals, under the rules of its regulator.

A broker is not an adviser. It may offer education and research, but it does not manage your trading, and a person or firm that offers to trade your account for a share of profits may need separate authorisation, so check it.

Brokers also vary in who they accept. Many serve retail clients through one group company in one country and a different company elsewhere, so a brand name alone does not tell you which company holds your account.

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Dealing models: market maker, STP and ECN

You will see these labels on broker websites. They describe, roughly, what happens to your order. They are marketing categories, not legal ones, and one broker can mix them across account types.

Model	What happens to your order	How the broker earns	What to look at
Market maker (dealing desk)	The broker quotes its own prices and may take the opposite side of your trade	Spread, and potentially your losses if it does not hedge	Whether the execution policy discloses this, and how it handles requotes and slippage
STP (straight-through processing)	The order is passed to one or more liquidity providers	Usually a markup on the spread	Which providers, and how the broker adds its markup
ECN-style	Orders interact in a pool of quotes from several providers	A commission per lot, with a spread that comes from the market	Real spreads at your trading hours, and the commission

Three points keep this in proportion:

• A broker taking the opposite side of your trade has a conflict of interest. That does not make it unsafe, but it is a reason to read the execution policy and to prefer a regulated company.
• The model does not tell you how good the execution will be. Slippage and spreads depend on the broker's liquidity, your order type and market conditions. See slippage.
• Names are not consistent. For example, the Exness Help Center says Exness does not provide ECN accounts, even though it offers a Raw Spread account with a commission. Do not assume that a "raw" or "zero" account is the same thing as an ECN account.

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How forex brokers make money

Source	How it works
Spread	The gap between the bid and ask. The broker may add a markup to the price it receives from its providers
Commission	A fixed fee per lot, charged on some accounts in exchange for a tighter spread
Swap	Overnight interest charged or credited on positions kept past the daily rollover; the broker can include a markup
Other fees	Currency conversion, inactivity, withdrawals by some methods
Client losses	In the market-maker model, the broker may keep the opposite side of client trades

Worked example (hypothetical). On EUR/USD, 1.00 lot has a pip value of USD 10 (100,000 x 0.0001). Suppose Broker X offers a spread-only account with a 1.2-pip spread, and Broker Y offers a 0.2-pip spread with USD 3.50 commission per side per lot.

	Broker X	Broker Y
Spread cost per lot	1.2 x USD 10 = USD 12.00	0.2 x USD 10 = USD 2.00
Commission per lot (open and close)	None	2 x USD 3.50 = USD 7.00
Total per lot	USD 12.00	USD 9.00
Total for 20 lots a month	USD 240.00	USD 180.00

On these made-up numbers Broker Y costs USD 60 less over 20 lots. The comparison would reverse if Broker Y's real spread at your hours were 0.5 pips wider: its total would then be USD 9.00 + 0.5 x USD 10 = USD 14.00, more than Broker X. The lesson is to compare the total cost on your own pairs and times, using a demo account, and not to rely on one headline number. Spreads can widen with volatility and around news. See spread explained.

A real example of published conditions: the Exness Help Center ("Trading account types", updated 27 October 2026, read on 1 November 2026) lists five account types, where only the Zero and Raw Spread accounts charge a commission (Raw Spread up to USD 3.50 each side per lot; Zero from USD 0.05 each side per lot), and the others are commission-free. Each broker publishes different terms, so check each broker's own website.

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Forex broker regulation and how to check a register

A regulator licenses firms to offer investment services and sets rules on capital, client money and conduct. A licence does not guarantee profits, and it does not protect you from trading losses. What it can do is give you a defined company, a rulebook and a complaints route.

Steps to check a forex broker

1. Find the legal company. In the client agreement (or the footer of the client area), note the full company name and its registered address.
2. Find the regulator it names. Do not use a logo on the home page as proof.
3. Search that company on the regulator's own register. Use the regulator's website, not a link supplied by the broker.
4. Match the details. The company name, registration number, website and address should agree with the register. Check that the permissions cover the product you want (retail forex or CFDs).
5. Check for warnings. Many regulators publish warning lists of unauthorised firms.
6. Check that you are in the covered group. A group may have regulated companies for some countries and offshore companies for others.

Where to look

Regulator	Where to check
UK, Financial Conduct Authority	FCA Financial Services Register
US, National Futures Association	NFA BASIC database
Cyprus (EU passport), CySEC	CySEC investment firms
Australia, ASIC	ASIC registers search
Japan, Financial Services Agency	FSA list of authorised businesses and its list of unregistered businesses
Other countries	The financial regulator or central bank of your country; ask which entities may serve residents

Rules differ a lot by country. A firm can be properly authorised somewhere and still not be permitted to offer services in your country. Your local regulator can tell you which brokers may serve residents.

Group companies matter. Some brokers, including Exness, operate through several group companies authorised by different regulators. The company that serves you is named in your client agreement and in your client area. Check that company on its regulator's register. See Exness regulation for how to find the entity and the register.

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Red flags in an online forex brokerage

Stop and check again if you see any of these:

• Guaranteed or very high returns. Nobody can guarantee a trading result.
• Pressure to deposit now or to deposit more to "unlock" benefits.
• A company you cannot find on any regulator's register, or whose details do not match the register.
• A payment request to a personal account or to a different company than the one in the contract.
• An offer to trade your account for you, or "signals" with fixed profits. See forex signals.
• A new website and no track record with many five-star reviews and little detail.
• Complaints about withdrawals that are refused, delayed, or hit with new fees.
• A name that looks like a known firm. Fraudsters can copy the name and logo of genuine companies, so check the address and the web domain against the register.

Reviews are weak evidence by themselves. Read complaints in detail and look for patterns in what the broker actually did.

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How to compare forex brokers

Use a simple scorecard and answer each item from the broker's own documents.

Question	Why it matters
Which legal company will hold my account, and who regulates it?	Decides your protections and complaints route
Does it accept residents of my country?	Some regulators restrict who a firm may serve
What are the spread, commission and swap on my pairs?	The cost of each trade
Which account currency and minimum deposit?	Conversion costs and entry size
Which platforms and order types?	Fit with how you trade
How are deposits and withdrawals handled?	Fees, timing and the name on the payment account
How does it execute orders, and what is its conflict policy?	Slippage and fairness

For country-by-country guides see how to choose a forex broker. If a broker's terms are unclear, ask the support team in writing and keep the reply.

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Frequently asked questions

What is a forex broker?

A forex broker is a company that gives retail traders access to the currency market. It provides an account and platform, quotes prices, executes orders, holds your funds, and earns money from spreads, commissions, swap and other fees, and in some models from client losses.

How do forex brokers make money?

Most earn from a markup on the spread, a commission per lot on some accounts, swap on overnight positions and fees such as currency conversion. A broker that is the counterparty to clients can also profit when they lose, which is a conflict of interest to understand.

What is the difference between a market maker, STP and ECN broker?

A market maker quotes its own prices and may take the other side of your trade. An STP broker passes orders to liquidity providers. An ECN-style broker matches orders in a pool of providers and usually charges a commission. Brokers can combine these, so read the execution policy.

How do I check if a forex broker is regulated?

Find the legal company in the client agreement, then search that name on the register of the regulator it names. Confirm the permissions cover retail forex or CFDs and that the website matches the register entry.

What are the red flags of a bad forex broker?

Guaranteed returns, pressure to deposit quickly, a company missing from the register, payments to a personal account, offers to trade for you, and complaints about refused or delayed withdrawals.

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Sources checked on 1 November 2026

• Exness Help Center: Trading account types, What trading account type should I use? (states that Exness does not provide ECN accounts), Are trading accounts charged a commission fee?.
• Regulator registers listed in the table above (pages reachable on 1 November 2026; the search results themselves were not run).
• Japan FSA, list of unregistered businesses.
• The cost comparison uses hypothetical figures: 1.2 x 10 = 12; 0.2 x 10 = 2; 2 x 3.50 = 7; 2 + 7 = 9; 12 x 20 = 240; 9 x 20 = 180.

Risk warning: Forex and CFD trading carries a high risk of loss and is not suitable for everyone. You can lose more than you deposit in some cases. Past patterns do not predict future results. Nothing here is investment advice.