|The world of forex trading isn’t just about the trader and the market itself. Traders can’t easily venture into the market and find a seller, just like the market can’t find them. To remedy this issue, traders use what’s known as a forex broker to help them facilitate trades.|
Forex brokers are known as ‘legal entities that act as intermediaries between traders in the market.’ Their role in the market involves linking buyers with sellers—and sellers with buyers.
These forex market intermediates can be a single individual, though nowadays they’re most commonly an institution or a company that offers various services related to the market, such as a forex trade copier.
Today’s forex brokers also have an online presence, as much of the foreign exchange market operates online nowadays. They offer their various services via electronic media, making forex trades, forex signals monitoring and even using forex analysis tools easier than the past.
Forex brokers can also act as a guide for traders, especially if they’re a novice trader. Brokers can offer great advice and services to match the skill level of the trader in question. Many of the best forex brokers today provide enough services like forex EA software to ensure traders have all the tools they need to conduct successful transactions.
Many forex brokerage sites also provide client-based software for traders, particularly if they’ve registered for their services. This software can be client software used as a trading platform or forex analysis tools. Tools like these, according to many brokers, can help traders find the best chances to make a ‘sure profit’ in the current markets.
Leverage and spread
A forex-based broker can provide what’s known as leverage in forex trading. The ability to use this ‘tool’ is typically offered with every account associated with a broker. This leverage varies from amounts ranging from 10:1 to 1000:1.
Leverage generally refers to the amount of money you have to trade, if you have a certain increment of funds in your account. A 10:1 leverage, as an example, means that a user will have $10 to trade for every dollar in their account. While many users can make good profit of taking advantage of their leverage, it offers just as many opportunities for losses.
Forex brokers usually manage two different balances for traders. Traders usually have one balance, that’s their actual balance, and another balance that they would have if they closed all active trades—also known as a net balance.
An an intermediary, forex brokers pass trades through the market for traders. When they take care of this, they often offer traders prices different than the prices that are actually available to them. This is typically known as ‘collecting the spread,’ a usually small commission that’s taken from a trader’s leverage trade size.