WHAT IS FOREX BROKER?

WHAT IS FOREX BROKER ??

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WHAT IS FOREX BROKER?
Forex broker can be a company, institution, agency, or individual where the job is to conenct between the sellers and the buyers. And what is the product? Of course the forex / currency pair and other instruments.

In the inter-state trade activities or currency exchange, this happened was long ago when the economic relations between countries are bound together with other countries. So you can say that forex brokers have been exist since long time ago. And now look at the economic development of inter-connectivity among countries that more massive, and saw the forex exchange market, forex broker is certainly growing more in this world.

WHY WE NEED FOREX BROKER?
In fact, forex trading activity will be dominated by the major central banks around the world. With that major portion of the major currencies such as the US, Euro, Yen, and Pound. Well in order to conduct transactions with banks / institutions, for us retail trader is not possible. In addition we have no relation, also the minimum limit of transactions.

Well, this is where forex brokers take a part, retail forex broker will arrange for any individual trader could allow it to participate in conducting forex trading. So the broker will forward the request from traders to larger broker or liquiditor provider and so on, and every trader request`s can be accommodated in the massvive forex market.

FROM WHERE THE FOREX BROKER GETS THE BENEFITS?
Of course, each broker has its own rules in order to get the profits of their services. some broker charge fees / commission, some from the difference/spread between the buy and sell. Generally most broker get the benefits is from the spread. Usually about 1-2 pips on major currencies (US, Euro, Yen, Pound, or who crowded traded), and can be up to 5 Pips for secondary currency. From about 2 Pips are certainly not all of the net profit of the broker, there are operating costs, the cost of the fee to a larger broker, commission fees to agents, etc.

ONLINE FOREX BROKER
Before internet exists, trader using old communication model for each transaction to the broker. which is with the phone, but now changed thanks to internet connection, traders can directly be real time to trade forex. With special advanced applications (trading platforms) trader can do monitor pricing, order execution much faster and in real time. In addition traders are also equipped with a variety of tools for analysis, access to news, chat / discussion, etc. With online forex trading, traders can trade anywhere and anytime.

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FOREX BROKER REGULATION
How to choose a forex broker among hundreds of them? One of the options that can help us see the broker is to find out info about regulation / regulator which is followed by the broker. Regulated broker that means it has to follow the principles and rules that are on the regulator. If the broker violate the rules, it will be penalized by the regulatory body.

The regulator itself is an official financial institution under the government of a country. The better the regulator is then followed by the regulations that the broker will be more stringent. Brokers can not operate with a standard verbs, or its banking license could be revoked and sanctioned by the regulator. Surely we should also know for good regulators and in which country are they? including: NFA (US), FSA (the UK) Europe and many more. Check our broker forex regulator list here

MULTIPLE TYPES OF BROKER
Generally traders do not care, and it is impossible to know exactly how to manage each transaction broker who converted from the client. beware of brokers who do not clearly regulated and offer big bonuses.

BROKER DEFINITON
  1. Individuals or companies that charge a fee or commission for executing buy and sell orders submitted by investors.
  2. The role of the company when acting as an agent for customers and charge a commission for customer service.

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