The Forex market has gained massive popularity in the last five years.  Market participants have increased drastically each year.  Besides offering free streaming charts and massive leverage the forex market is commission free.  How can they possibly make money? 

The typical spread on the EUR/USD currency pair in the forex market is 2 pips.  This is the difference in the price you can go long or short on the currency pair.  A pip is a 1 unit move on the price.

If the EUR/USD is trading at a bid of 1.5577 and an ask of 1.5579 then the spread is 2 pips from the two price quotes.

If you are trading a standard contract of $100,000 lot size the spread would cost $20 per trade.  If you were trading a smaller contract of 1 mini lot or $10,000 the spread would cost $2 per trade.  Therefore, the larger amount of money you trade the higher the spread is going to cost you.

Are you really getting a commission free trade?  To participate in the equities market you must have a broker carry out your trades.  Commission plans vary, but generally stock trades cost between $5-$10.  In this case we will use the higher price of $10.  When you buy a share of Microsoft there is also a spread.  The spread generally is one cent, one of the tightest spreads in the stock market.  If MSFT trades a bid of $24.03 and an ask of $24.04 then there is a spread of one cent per share.  Now if you were to purchase $100,000 worth of MSFT stock this would be 4,150 shares.   You must multiply the number of shares by the .01 spread.  This would cost $41 in the spread + the trade cost of $10 = $51 to buy $100,000 worth of MSFT.  Remember to control the same amount of money in the forex market it would cost $20.  Therefore, there is still a cost to trade in the forex market, but since you must pay a spread in the equity markets anyways, you really are saving some money by not paying a commission.  In the previous example we used MSFT, there are some stocks that trade with a spread of .05 to even .12  In this case the cost of the trade would be exaggerated even higher than the forex market.