A Forex broker is a company engaged in the provision of access to foreign exchange markets. Forex brokers are dealing centres that support and advice traders on current conditions in the Forex market. They also provide trading platforms and other brokerage services. Year after year, Forex brokers are expanding their offered range of trading tools, enabling their customers to gain more from this lucrative market.
Advanced dealing centres, like TeleTrade, provide their customers the ability to go beyond currency, stocks and commodity trading, by also giving them the option of CFD trading. CFDs allow almost anyone to profit from the difference in the assets’ value.
HOW DO FOREX BROKERS PROVIDE ACCESS TO TRADING?
Access to Forex and CFD trading is provided through the internet, by using special software which is called trading terminals or trading platforms. Different Forex brokers use different platforms. TeleTrade provides access to its clients through the popular, reliable and time-tested MetaTrader platform.
The volume of trading in Forex market is called lot. A lot represents the standardised quantity of a financial instrument that someone has to obtain in order to make a transaction. One lot is equal to 100.000 units of the base currency. For example, in the currency pair USD/JPY the base currency is the U.S. dollar. Thus, a lot on this pair will be equal to 100.000 U.S. dollars.
This amount, however, is not affordable for most ordinary people. Those who do not have the funds to trade in Forex by lots, come to the aid of Forex brokers, who offer their clients the option of margin trading.
HOW IS THEIR INCOME GENERATED?
Forex brokers are intermediaries in the execution of purchase and sale of financial instruments. The income they receive is generated through the spread - which is the difference between the price the market maker is prepared to pay for buying the currency, versus the price at which he is prepared to sell the currency - or through immediate payment for conducting a transaction. Therefore, Forex dealing centres are highly interested in the activity of their customers, as it is from these transactions they receive their income.
HOW TO CHOOSE A FOREX BROKER?
Traders have to be very careful when choosing a Forex broker.
You have to pay attention to the capitalisation of the company, the years of its market presence and the number of its active clients.