Forex brokers are self dependent parties, who render services used extensively in the Forex market. A forex broker's some goal is to bring sellers and buyers together in the market and thus a forex broker acts as the third-person facilitator between a buyer and a seller. It is possible to buy or sell currency pairs directly through banks and other financial institutions, but brokers offer other that are beneficial to the trader like charting platforms, analysis tools, and access to several leverage. Brokers derive their profit from commissions on orders given. Clients may give orders in a variety of ways, through calls on a telephone, order placement over the internet, etc. There are two main accounts handled by forex brokers, they include; advisory accounts and discretionary accounts.
ADVANTAGES OF FOREX BROKERS
There are advantages to using a broker. These advantages basically relate to forex traders in all. Some of these advantages include
They know their market and have already established relations with prospective accounts. Brokers have the tools that enable them penetrate this market.
They might be cheaper in smaller markets, with smaller accounts and with a limited line of products.
WHAT DOES FOREX BROKERS DO?
Just as any other factor in the forex market, forex brokers have works that they do. Their works are geared to the success and profit of the forex trader. These functions include;
Forex brokers exercise humility, honesty high class skill and integrity.
They ensure prompt submission off written offers and other trading document.
They make deposits on escrow accounts as at when due.
They maintain the escrow account of their client.
TYPES OF FOREX BROKERS
Forex brokers can be divided into two types: ECN (electronic clearing network) brokers and market makers brokers.
ECN brokers are observed to be the more ELITE of the two types of brokers, because they provide more direct access to the interbank market, where institutional forex trading takes place. ECN require a larger or huge initial deposit to enable their clients to trade. in addition, an ECN broker may charge service fees or per-trade fees Most ECN brokers are motivated by the joy to see their clients profit from their forex activities, this is because the longer the client’s account gives a positive balance, the longer the client will keep trading—and the more commissions/income the broker will earn.
Market makers make their timely profits from the differences between the trading prices of currency pairs, and not from commissions charged on order placement by their clients. Day to day online forex brokers give valuable services, provide marketing entries and exist, and provide their clients with the opportunity to make wonderful profits from their trading.
HOW TO BECOME A FOREX BROKER
Registration of your company in a local or offshore jurisdiction
Application for a Forex broker license
Opening a bank account within the jurisdiction to collect funds from clients
An application for receiving online payments, if you'll be accepting online funding
Preparation of legal documents
Pay registration fees and meet a minimum capital requirements
Find liquidity partners, clearing company(s) that will clear your trades.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.