I don’t know the answer by experience, but thinking statistically, there are over 80% of traders who consistently lose money by trading in the Forex market, and only 5–6% who consistently make profits. So, based on that, I think a brokerage business is better if there is the necessary capital. But, you should keep in mind that the market is full of brokers and the competition is very high.
Also, you should spend a lot of money for the beginning.
Generally, the market maker brokers don’t actually resend the clients’ money into the currency market, but hold the trades with themselves. So, when a trader loses, he loses to the broker and the money belongs to the broker. In case of win, the broker has to pay the trader. Based on this, the traders who lose are the main source of income for such brokers.
Another source of income is the spread and swap.
However, even if the profits of a popular broker are high, the initial investment is huge. You, as a broker, should have accountants, developers, tech specialists, marketing experts, account managers, and more. The platform also costs money. For example MT4 costs $100 000 one time fee and $1500 monthly fee. Also, you should consider the apps, plugins, and so on.
The regulation also costs a lot, and you have to deposit money as collateral.
However, the most difficult part is to attract clients. The brokers have to spend a lot on marketing and advertising.
Yet, the popular brokers make dozens of millions. For example, Plus500 made $275 millions for 2015, as shows below:
FXCM’s total revenue was over $390 millions in 2015, but the net income can be over $10 millions, and sometimes even negative.
AVA Trade’s annual net revenue is over $20 millions, which is higher than FXCM.
I hope this was informative!