Show Buttons
Share On Facebook
Share On Twitter
Share On Google Plus
Share On Linkdin
Share On Pinterest
Share On Youtube
Share On Reddit
Share On Stumbleupon
Contact us
Hide Buttons

subscribe: Posts | Comments

Do I Need a Forex Broker?

0 comments
Do I Need a Forex Broker?

Although the Forex market is almost entirely cantered around online investments and interactions, brokers are still an important resource for investors. The advice and expertise they have to offer will exceed that of most intermediate investors. Not only do they offer in-depth knowledge, but also organize their customers and make transactions extremely easier.

Often the commissions of trading are worth the overall positive influence a Forex broker will provide.

Broker Advice                   

Forex brokers are considered the most educated people within their market. Just as an airplane pilot is trusted to fly a commercial jet, a broker should be trusted to make informed decisions that award both him and her and his or her customer with profits. Never deter from influencing your own opinion into the transactions your broker makes, especially if you have extensive experience.

Generally brokers are working off commissions from the profits they generate. Therefore, it is their sole goal to research the market and study fluctuations in order to determine the best investment areas. If                you are a novice in the Forex market, it would be most beneficial to seek the advice of brokers rather than base your investment decisions on hunches or ideas that have not been thoroughly researched.

Types of Forex Brokers

There are two general types of Forex Brokers, the Market Makers (MM’s) and Electronic Communications Network (ECN’s). The main difference between to the two classifications lies within the bid/ask price at which the broker allows the customer to place.

Most Market Makers tend to offer a single bid/ask price for every currency pair. They also offer the customer the chance to make investments with or against the broker on a fixed spread. The ECN brokers tend to allow their customers to mandate their own bid/ask prices.

Traders with an ECN broker then tend to see other investors with brokers making their own investment prices as well. Because the market is unregulated, meaning the prices will vary on each currency pair depending on the broker, it is important for investors to research brokers prior to selecting.

Choosing a Forex Broker

Most sites will emphasise the positive aspects of each type of broker, and usually discuss the same positive qualities. So, it is more important to focus on the negative aspects of each type of broker to determine which is a correct choice for you.

MM brokers have the ability to take a position against your investment, usually have higher prices than ECN brokers, discourage a minimum drop off price, and manipulate    the prices if they have invested against you in order to cut their own losses.

On the other hand, ECN brokers usually will not offer the integrated charting, news and organization he MM brokers can, and prices are usually more volatile making their investments fluctuate more. This can be good if the fluctuation is in a positive direction, but it can also create major losses.

Becoming familiar with the two main types of brokers will allow a novice to choose the correct broker. Research is the most crucial part of the entire process.

The most respected brokers will have the widest customer base, and be referred the most often inside the market. With hundreds of sites now reviewing brokers, and forums that have past investors discussing issues, there is no reason to accidentally hire a shady broker firm.

Be Sociable, Share!