What is a forex brokerJulius Conley 13 / February / 19 Visitors: 164
One of the most frequently used terms when trading currencies is "forex broker". In this article we will take a closer look at who a forex broker is and what are its main functions in the Forex market.
First of all, it is necessary to explain who a broker is in general. At its core, a broker is a person who acts as an intermediary between a buyer and a seller. A broker is not necessarily an individual - in many cases, a company or any other legal entity can act as a broker. Brokers receive a commission for their services, the amount of which is clearly indicated and fixed in legal form.
In the foreign exchange markets, which include Forex, a broker is a participant in the exchange who is licensed to carry out brokerage activities and is officially registered on this exchange as a trading participant. Simply put, a forex broker has the legal right to carry out transactions with foreign exchange funds or securities of his client, with whom he has entered into a compensated contract. Unlike a forex trader, who independently disposes of his own funds, a forex broker has only client funds at his disposal, which he uses either at his own discretion or on behalf of his client. This point is clearly spelled out in the contract in order to prevent speculation with clients' funds.
The main functions of a forex broker
What are the main functions of a forex broker in the foreign exchange market? Its most important and most important function is to help its client get the maximum profit. This is his most important task, and it is for her sake that the client instructs the forex broker to operate with his own funds. In addition, the forex broker has a number of important functions:
- Conclusion of transactions in the Forex market as a commission agent or his client's attorney.
- Providing the client with all information related to that or other transaction, especially risk information. In most cases, brokers are the best at all "undercurrents" in Forex and know most of the hidden risks that are unknown to an ordinary investor.
- Keeping all financial documentation of their client in accordance with applicable law and the requirements of the Federal Service for Financial Markets.
- Disclosure of information on transactions with securities, in the manner and in cases consistent with the current legislation.
- Forecasting the prospects or futility of a particular transaction (if the broker acts on the instructions of the client).
This is a list of the main functions of forex brokers, for the sake of which the majority of investors hire rather than play on the stock exchange themselves. Since the investors themselves are divided into two groups - those who give instructions to the broker on exactly which positions to apply for, and those who trust the broker with their savings, leaving him to choose the most optimal trading strategy. The first group includes experienced investors who have a good understanding of the Forex market and know where to invest. In this case, the broker's task is to illuminate and predict the success of the transaction that his client wants to carry out as much as possible. And the second group of investors is inexperienced or inexperienced investors who are just taking their first steps in Forex. For them, the best option would be to rely entirely on the experience and intuition of their forex broker. Therefore, in this case, the choice of a broker must be treated very carefully.