What does a broker do? Foreign Exchange Market Traders need a trading platform that enables them to purchase and sell foreign currencies. Actually, the firms that offer currency traders access to such trading platforms are referred as fx brokerage firms. Besides providing trading platforms, brokers are responsible for monitoring and guiding investors on the current status of the market. The broker is usually licensed by a recognised exchange commission. To trade in the market as a fx trader, you are expected to go through a broker before any of your activities reflect in the market trades. Before selecting a broker, a trader needs to focus on the reputation of the broker, in that case trying as many platforms as possible is wise since it helps currency traders find the right broker.
Understanding who a broker is is the first step to finding an appropriate broker. A broker has diverse meaning in the foreign Exchange Trading Market. To be clear on the definition, a broker own online platforms that act as a link between a trader and the market. In other words, a broker is the entry point to the foreign Exchange Trading Market. To reach out to the market, a trader is required to open an account with a broker.
The broker chosen by the trader deals with execution of transactions at the expected time. A broker literally holds your capital in order to enable you to trade with ease. Fx brokers also give actual time prices through their platform to the traders. The broker has the task of training the trader how to use their platform to buy and sell currencies in the market. They do this by providing a demo account for the traders to trade with. In addition to providing training and trading platforms for traders, brokers also give analysis or possible outcome of the trading currencies.
THE ROLE OF ENC BROKERS
An ENC broker is literally skilled in finance dealings. Such a broker depends on Electronic Communication Networks (ECNs) to offer the clients automatic access to other stakeholders in the currency trading market. An ENC broker is mainly concerned with comparing trades between market traders. In that case, it can never trade against a client. Such brokers are known to charge the clients a constant fee on each transaction.
WHAT IS THE BROKER INTERPRETATION OF SPREAD?
The spread is precisely the difference between Bid and Ask price. During a trade, a trader should always pay attention to the size of the spread. Fx brokers are usually categorised into two; brokers with fixed spread, and floating spread. A fixed spread remains constant at all times even during market fluctuations and volatility. Dealing with fixed spread brokers is more profitable and convenient to a trader. Floating spreads keep changing the value for Ask and Bid price.