What is a Forex Broker?
Forex Market, FX or Currency Market is the largest global non-centralized exchange where trading is performed electronically via networks. Main Forex participants are international banks and financial institutions, known as Interbank market, where currencies are exchanged or converted one to another. Read more about Forex via Wikipedia.
- In fact almost any individual can engage in Forex Trading, while the Role of the Forex Broker is to provide access to trade Forex Markets or other Instruments serving as Online Forex Broker mostly to retail traders alike Professional Traders, allowing to start even with small investment.
Definition and Functionality
A Forex broker is a financial middleman who helps buy and sell foreign currencies for individual traders, institutional investors, and companies. Operating in the foreign exchange market (Forex), the biggest and most liquid financial market worldwide, brokers give traders a stage to speculate on the price swings of pairs, including EUR/USD or GBP/JPY.
Forex brokers mostly serve to link traders with the interbank market, where major banks and financial institutions trade currencies. To enable traders to make educated decisions, forex brokers also provide access to a range of tools, including charting software, technical indicators, leverage, and educational resources. They also make money on commissions on trades by charging spreads—that is, the difference between the buy and sell rates.
Forex brokers might present several execution strategies. While ECN (Electronic Communication Network) brokers immediately route clients’ orders to liquidity providers or the interbank market, market makers build their own market and provide liquidity to their clients.