[obe24]

There's alot of good stuff in the beginner's bootcamp section of these forums. I would suggest you go there.

As to your specific questions, I don't know about #1, but for #2 it's important to remember that in your example you are BORROWING Pounds to buy Euros, which is where the swap comes in. If your account is in dollars, then your trading platform will automatically figure the exchange rate from dollars to Pounds, so that you can buy Euros with them. It's an important point. But yes, someone (theoretically) is taking the other side of the trade, that's what sets the price. Unfortunately, most retail FX brokers are bucketshops, meaning they take the other side of the trade instead of finding someone else to take the other side of the trade.

Which brings me to #3 and #4 - that's how they make money. They make it on the difference in the swap (which is crazy right now) plus the spread in the bid/ask, PLUS they are usually on the other side of their traders, who, for the most part, don't know what they are doing.