What to Know About Forex Brokers
A broker is an intermediary between a buyer and seller. Generally speaking, a broker is an independent agent used extensively in some industries. The main responsibility of a broker is to convene buyers and sellers so that they can negotiate with each other using the broker as the intermediary. Therefore a broker is a facilitating agent for transactions between buyers and sellers. An example could be a real estate broker that facilitates the buy and sale of a property.
Brokers can also provide ample market information concerning products, prices and market conditions. Depending on the case, the seller can be represented by the broker (90% of the time) or the buyer (10% of the time) but not both concurrently. An example could be a stockbroker, who on behalf of his client sale or purchase shares. Currently, brokers play a key role in the buying/selling of currencies, stocks, bonds and other financial services.
Brokers or Brokerage Firms (Brokerage Firm)
Brokerage Firms serve an audience of investors who trade in instruments and assets of different types such as currency pair, stocks, commodities and many others, usually through tools such as platforms of electronic trading or through company agents, whose use is increasingly being circulated among investors and traders around the world.
A traditional brokerage firm that offers complete service to its clients performs more duties than the straightforward execution of transactions with other financial assets or shares on behalf of its clients. The staff of this type of broker carries the responsibility of investigating and analysing the markets to provide suitable recommendations in such a way that they can direct the actions of the clients, which in some cases may include fund managers and investment portfolio managers. These firms also provide additional margin for certain approved clients to enable them to make investments on credit, subjects to terms and conditions agreed between both parties.
Online Brokers (Discount Brokers)
The online broker or discount broker is a broker who charges a small commission to allow the execution of transactions in the market, through computerised trading systems (the electronic trading platforms used by many brokers), instead of utilising the services of an agent broker to place the orders in the market.
A significant number of brokerage firms currently offer low-cost online trading options, compete strongly to attract customers and their money for which they are quickly changing to this mode of operation in the markets, which is not only less expensive but also more efficient.
Presently, most Forex brokers operate as an online broker and provide their clients with the chance of operating in the Forex market from any website with an internet connection through a trading platform. This allows these brokers to offer a service with low costs compared to other markets.