The foreign exchange or forex market is basically an over-the-counter decentralized market for the trading of foreign currencies. This marketplace decides foreign currency exchange rates for each different currency involved in the transaction. It comprises all aspects of purchasing, selling, and trading foreign currencies at pre-determined or current values. Forex brokers deal in forex trading who matches clients with potential traders. They determine which currencies the client may be interested in buying and selling.
Types of brokers
There are several types of forex brokers. They include online brokers who provide services online and brokers who cater to individuals by telephone. The best way to find the right broker for you is to first decide which type of trader you want to be and what your trading goals are. For instance, if you are just looking to learn the ins and outs of forex trading or if you plan on investing small amounts of money, a free forex broker would be ideal. These brokers have minimal service fees but they typically only trade currencies that you choose for yourself.
Benefits of choosing a forex broker
The benefits of forex brokers are numerous and they can be classified into five major groups namely the advantages of full-service brokers, the benefits of discount brokers, the benefits of trading companies, and the benefits of individual brokers.
Full-service brokers consist of the most experienced traders who not only trade on their own behalf but also assist the trader in all his decisions regarding trading and investments.
Discount forex brokers
Discount forex brokers meanwhile offer advice on currency trading that is often disregarded by the seasoned traders.
Trading companies on the other hand provide online facilities to their clients so that they can trade in the forex market even from the comforts of their homes.
Individual brokers are usually employed by trading companies as an extra service to assist the traders to execute their orders without worrying about incurring commissions or additional costs.
It must be emphasized that these brokers do not guarantee any profit rather, they simply facilitate the transactions by executing them in a fair and systematic manner. Discount brokers on the other hand facilitate the trades by executing them at lower prices than those charged by full-service brokers. In fact, it is not uncommon to find full-service brokers charge as much as five to six percent of the total amount traded.
The benefits of individual brokers however outshine the benefits of discount brokers when it comes to trading volume. The traders who trade using brokers working on their own behalf need not worry about paying commission expenses since they are actually trading in quantities less than the stipulated amount by discount brokers.
Discount brokers have the benefits of offering instant quotes and alerts. They also have better access to market information and they can react more quickly in emergencies. The benefits of trading with full-service brokers however still remain to be superior in terms of trading conditions, access to trading information, and instant quotes.
In general circumstances, however, it is undeniable that full-service brokerage firms charge the most because they have access to market information and they constantly monitor the trading market. It is therefore essential for new traders to seek the services of a brokerage firm that charges affordable commission fees in order to enjoy the full benefits of Forex trading.
Here are some of the best forex brokers in the United States.
An IG broker is a registered member of the Institute of International Financial Brokers (IFB) which is an international body that governs the functioning of the financial markets. An IGB regulates the policies and standards of the various brokers and their products. It also requires the members to have a minimum of investment of at least five thousand pounds to commence trading and maintains a high standard of discipline for its members. In order to maintain membership of IGI, an IGB broker must adhere to a strict code of conduct which requires the broker to be a member of the IGB for a minimum of three years and to have a minimum of five thousand pounds invested in capital market funds.
A well-established IGB is well aware of the risks involved in investing in foreign exchange and hence provides ample education to its members to assist them to understand the volatility and risk associated with the business. The brokerage firm does not support hands trading and hence does not provide any facility of trading in your demo account. However, the company does offer its members a free practice account where they can carry out simulated trading to check if they are comfortable with the way the software works and the market conditions. This account is available to all IGB members upon subscription.
They are very popular and have a very impressive reputation for customer service, in my experience. They have excellent software and tools available to their customers to help them with trading, and they also offer several different plans for trading. These plans include automatic money management, demo account, and a number of different trading strategies.
Features: Some of the different features of this broker are, the ability to manage your money using different tools, automatic deposit setting up, automatic savings and loan rates predictions, and money transfers among other things. I also like the customer service they offer. Their customer service representatives are always available twenty-four hours a day to help you. When I need help regarding an order or a question, I tend to feel much more comfortable dealing with someone who is there twenty-four hours a day. The amount of trading hours varies, but most traders have been able to stay in business because of it. It is definitely one of the best overall brokers out there. Another nice thing about this particular broker is that they also offer direct deposit. This allows traders who do not maintain multiple accounts with this broker the option to transfer all their money into savings accounts.
As we know now, there are a lot of trading services available online but one of the most prominent among them is the interactive brokers in the USA. Why are they so popular? If we take a look at the current forex market scenario, it clearly shows that the forex market is far more volatile than the traditional stock market. This is because transactions involve far more risk, which is why most traders ask for an interactive broker to trade for them.
They are mainly focused on larger banks and financial institutions and what they cannot understand is that the forex market is far from being a ‘one size fits all’ kind of market. There are different situations and markets where people can invest – and this is where a forex broker should be able to help. These services are also good for those who want to engage in trading but are not ready to spend huge amounts of money on commissions.