Are you new to Forex trading and unsure where and how to start? If so, you should first grasp the role of Forex brokers. Why is this important? It’s important because the Forex broker has the role of an intermediary between you and the financial markets. Also, it enables you to use the trading platform for your trading business activities.
Generally, when you start on the foreign exchange market, you know you must find a good broker to trade with. However, we often do not know what it is used for. To help you see more clearly, today, we offer to decipher the exact role of the latter.
Simply put, a forex broker is an intermediary between you and the foreign exchange market. More precisely, it is an intermediary between the trader and the interbank market (network of banks). It must enable traders and their clients to benefit from the best buying and selling prices provided by the banks with which it works.
These transactions are made via a trading account you open with the broker with whom you sign the contract. Once the latter has been administratively validated, traders can take full advantage of the market, invest, earn money and withdraw earnings. Generally, to familiarize yourself with financial trading, testing strategies, etc., without risking your money, brokers provide demo accounts.
Demo accounts are indispensable for new traders to learn the ropes of trading. Also, they facilitate learning how to use the trading dashboard, analytics, and much more. You don’t need to pay anything to use a demo account. You just need to register on the platform. You can try out the Market Giants demo account. But before that, we suggest reading Market Giants review.
Besides using a demo for your learning process, the brokers allow free education. As a registered client, you will have access to many free educational materials in the form of tutorials, ebooks, and mentorships one on one. Also, a personal account manager will be assigned to you so you can easily navigate the platform and learn the main functionalities of your trading account and trading dashboard. Finally, anytime you can benefit from client support service for any queries and potential issues. Multilingual support is preferable when you search for a convenient broker.
Forex brokers also provide their clients with a particularly interesting tool called leverage. It allows traders to obtain greater investment capacity. Its magnitude varies depending on the type of trading account opened. Generally, it goes from 10:1 and can go up to 500:1 at certain brokers. For example, with 1 dollar and a leverage effect of 500:1, one can take positions of up to 500 dollars on the market. Be careful, however, to use this tool with hindsight. If it multiplies the gains, it does the same with the losses.
Forex brokers are remunerated for their brokerage services with what are called spreads. When a position is taken on the forex, the broker offers a price slightly different from the best market price obtained on the interbank network. The spread is this difference. It varies between brokers, so be sure to compare several offers before you start with a specific broker.