Forex Brokers and their role in the Success of your Business
Who is a Forex Broker
The Forex broker would be an individual that works independently or with a firm to mediate between the buyer and the seller. The role of the broker would be to help in trading and offer their expertise either by sitting down with him or through the Internet. All brokers are required to have a valid trading licence and thereby should be registered as a member of the Futures Commission Merchant. There are various types of brokers at your service, full service brokers would be able to price quotes, give you investment advice and keep you advised of the trends of trading. Most forex brokers are affiliated to big firms or banks due to the large sums of money that are traded. But online forex has changed that, making it easy for anyone to be able to trade and participate in foreign exchange market. With the assistance of a discount broker you could have more control over the buying and selling decisions. Last but not least there is the introductory forex brokers who will assist in dealing with commodities and futures contracts.
What to Look for in a Forex Broker
Using common sense to screen brokers is foremost by checking the brokers record, these records will show whether the broker is successful and consistent. The difference between making money and losing money can be selecting an honest, consistent and reliable broker with a good reputation. A lot of people find themselves misinformed regarding the differences between forex brokers. The fact that FOREX is not centrally regulated like other markets allows the possibility for brokers to be dishonest with their clients. There are two kinds of Forex brokers that will offer their services; they are Dealing Desk Brokers who make money through the spreads and by trading against their client also known as a Market Maker. A Non Dealing Desk Broker or MT4 (metatraders) are brokers who supply access to the interbank market. Metatraders charge commission for keeping the spreads very tight or decide to increase the spread keeping the trading commission free. Another two types of brokers are Straight Through Processing Brokers who send their orders straight from their clients to the liquidity providers or banks which trade of the Interbank. Electronic Communications Network Brokers who allow their clients orders to interact with other clients orders thereby making a marketplace where everyone, market makers, independent traders and banks trade against each other by sending competing bids and offers into the system, both can be considered Non Dealing Desk.
How to Protect Yourself
Be aware of dealing with Desk Market Makers of the metatrader type as they do not have your best interest at heart. Trading is enough of a gamble so by dealing with these brokers your risks are much higher and your chances of losing greater. You certainly are better off with Non Desk brokers so that you need not worry about being scammed or compromised.