How is Profit Made in Currency Trading?

If doing Forex doesn't have any brokerage fee than how do Forex firms make a profit? If the firms are not brokers but dealers who act as principals in the transactions for what gain do they assume market risk as they serve as the other party to the investor? Have you ever wondered about these?
It is really quite simple, the dealers actually make their money through what is called the bid-ask spread. The buyer of the currency gives a price they will pay for it and this is called the bid price. The seller will also state his price and this is called the ask price. The bid-ask spread is the difference between the two prices. All markets have a spread. If you go to the bank you'll see that the cost of buying fifty Euros is much higher than the cost of selling fifty Euros. The market maker will of course charge a higher price than the original cost. This is where they get their profit.
The amount of the spread in currency trading is basically due the market's liquidity and transparency. If there are many buyers and sellers competing, this brings the bid-ask spread lower. Since the Foreign Exchange is the world's largest market and as the internet has given easy access to it the spreads are down to fractions of a cent. The sheer volume however of the trading that happens every single day is what makes it such a profitable business. Forex spreads are measured in what is called PIP. It stands for Percentage Interest Point. It is the smallest price increment that a currency can make. It allows us to see a rise or fall in the Forex values. It is used for the simple reason that we are dealing with different currencies. It is the alternative to measuring in terms of dollars and cents. Let's say we are looking at a EUR/USD pair if the quote says 1.3300/02 it simply means that there is a spread of 2 pips. The selling is 1.3300 and the buying is 1.3302, there is a difference of .0002.
With such a small fraction of profit, you will easily see why the players are mostly big institutions. The profit is really based on the volume of your investment. It can however yield great results if you already able to read the trends and ride on speculations. So what is the best way to learn the trade? It I best to start with a demo account. Practice until you develop a system and a trading style. Remember to start small and to put in only what you can afford to lose.