http://daytrading.about.com/od/currencies/a/RetailForexBrok.htm
In addition to fixing the prices, retail forex brokers also
trade against their customers. For example, if a trader is long the
GBPUSD market at 1.5674, and the market has moved against their
trade to 1.5628, a retail forex broker might offer a lower price of
1.5624 to the trader. If the trader then exits their trade, there
is a four pip difference between the actual price and the trader's
price, which the retail forex broker keeps as their profit.
Another problem with retail forex brokers is that they have
access to all of their customers orders, including entries,
targets, and stop losses. This means that they can make their own
trades specifically to take advantage of the trader's orders. For
example, if a trader is long the EURGBP market at 0.6712, and has a
target order at 0.6812, a retail forex broker might keep the prices
artifically low, so that when the market reaches the trader's
target order, there is a five pip difference between the actual
price and the trader's price. The retail forex broker would then go
short at the real price of 0.6815, while filling the trader's
target order at 0.6812, and keep the five pips difference as their
own profit.