A CFD broker earns mainly from the spread between its buy and sell prices, from commissions where it charges them, and from a margin built into overnight financing. Some also charge non-trading fees such as currency conversion. How much of that ends up as the broker’s income depends on its execution model: whether it passes orders to other liquidity providers or takes the other side itself. Every licensed broker is required to describe how it executes orders.
Key takeaways
- The spread is the most common source of income and is paid on every trade.
- Commission accounts charge a fee per lot in exchange for a tighter spread.
- Overnight financing is usually a reference rate plus a broker margin.
- Brokers that take the other side of client trades manage the resulting conflict of interest under their policies and disclose it.
- The order execution policy and cost disclosures are where each broker explains this for itself.
| Spread | Paid on every trade |
|---|---|
| Commission | None on currency trades; per symbol for others |
| Overnight financing | Reference rate plus a broker margin |
| Non-trading fees | Conversion, inactivity and similar charges, where applicable |
| Where to read the detail | Order execution policy and cost disclosures on the legal documents page |
The main sources of broker income
| Source | When it applies | How to see it |
|---|---|---|
| Spread | Every trade, at entry | Difference between bid and ask; see bid vs ask price |
| Commission | Per trade, on accounts or symbols that charge it | Commission column in the MT5 history |
| Overnight financing | Positions held past the daily rollover | Swap fields in the symbol specification |
| Currency conversion | When deposit, account and instrument currencies differ | Payment and account statements |
| Other non-trading fees | Inactivity, some withdrawals | non-trading costs |
How the execution model affects income
A broker that passes client orders to banks and other liquidity providers earns from the difference between the price it receives and the price it quotes, plus any commission. A broker that acts as market maker takes the other side of client trades itself, so client losses can become its income and client gains its cost. Many firms combine the two, internalising some flow and hedging the rest. Each approach has trade-offs, explained in ECN vs STP vs market maker. What matters to a client is that the model and its conflicts of interest are disclosed, and that prices and fills are fair.
| Model | Main income | Conflict to be managed |
|---|---|---|
| Agency (STP or ECN) | Spread markup and commission | Limited; the broker earns per trade either way |
| Principal (market maker) | Spread plus client net losses, less hedging costs | The broker can gain when clients lose; firms must manage and disclose this |
| Hybrid | A mix of both | Which flow is internalised and why |
How to check what a broker charges
- Read the cost disclosures. Spreads, commissions and financing formulas should be published.
- Compare typical, not minimum, spreads. Minimum spreads occur only in the quietest hours.
- Look up the financing rates. In the platform, as described in where to find swap rates on MT5.
- Read the order execution policy. It explains how orders are filled and where conflicts are managed.
- Check non-trading fees. Inactivity, conversion and withdrawal charges.
What this means for your costs
For short-term trading the spread and any commission dominate; for positions held for days, financing usually matters more. Working out the total cost per round turn, as in Marketsall account types compared, is the most useful comparison. Whatever the model, most retail CFD accounts lose money for reasons unrelated to broker income, chiefly leverage and position size.
Common mistakes to avoid
Judging cost by the headline spread alone. Commission and financing change the picture.
Ignoring financing on long holds. It can exceed the spread many times over.
Not reading the execution policy. It is where conflicts and fills are explained.
Assuming lower cost means better results. Position size and risk control matter more.
Risk warning. Trading CFDs carries a high level of risk since leverage can work both to your advantage and disadvantage. As a result, the products offered on this website may not be suitable for all investors because of the risk of losing all of your invested capital. You should never invest money that you cannot afford to lose, and never trade with borrowed money.
Frequently asked questions
How do CFD brokers make money?
Mainly from the spread between buy and sell prices, from commissions where charged, and from a margin built into overnight financing. Some also earn from currency conversion and other non-trading fees. Brokers that act as market maker can also earn when clients lose.
Do brokers make money when I lose?
It depends on the execution model. A broker that passes orders to other liquidity providers earns per trade regardless of outcome. A market maker takes the other side of client trades, so client losses can be its income; licensed firms must manage and disclose that conflict of interest.
What is a spread markup?
The difference between the price a broker receives from its liquidity sources and the wider price it quotes to clients. It is one of the main ways brokers are paid on spread-only accounts.
Where can I find out how my broker executes orders?
In its order execution policy and cost disclosures, which licensed brokers publish on their legal documents page. They describe how prices are formed, how orders are filled and how conflicts of interest are managed.
Is a commission account cheaper than a spread-only account?
Not automatically. Compare the total cost per round turn, spread plus commission, for the size and frequency you actually trade.
Related reading
Add up one trade's full cost
Take one instrument you follow and cost a three-night hold: the spread, commission if the symbol carries one, and three nights of financing. Volatility and liquidity shows how far that spread moves from one session to another and around data releases.
Register