In this third lesson we’ll explain what Forex brokers are, what they offer, and why they are needed to trade in the currency market or online. Furthermore, we’ll tell you which are some of the most popular online brokers for home trading and how they offer their services.
What are Forex brokers?
Forex brokers are intermediaries who act between the currency market and small investors. In fact, as we have already seen in lesson 1, the Forex market is not accessible to all but large investors, while small traders must have an intermediary such as a broker or a bank.
Therefore, to be able to trade Forex at home you have to go through a broker. In our course, we will refer to CFD brokers, who then provide CFDs, tools that allow you to trade up and down on the Forex and other markets. For more information on CFDs, please refer to our CFD article, which is part of the complete CFD course.
Choosing a Forex broker is important because you should know who you’re entrusting your money to. In this article, we want you to focus on the term “intermediary” because “broker” is often used erroneously.
In online trading, however, trading takes place automatically. When you place an order, you won’t deal with a person but with a trading software that does not grant any kind of privilege to friends or relatives, and has no ambitions to pocket more money. It is simply a tool offered by the broker to make you place purchase or sales orders.
Who are Online Forex Brokers?
When placing orders you don’t have to deal with people but with software that is offered by a broker. These are usually represented by a firm or corporation.
On our site you’ll only find regulated brokers authorized to operate in Italy.
An example of a regulated and well-known broker is 24option. 24option is a broker regulated by CySEC and managed by Rodeler Ltd, a company registered in the Consob register.
Another example is Trade.com, a broker whose platform is suitable for all types of traders, both beginners and advanced ones, since it can be customized.
Who does the broker support?
The broker earns on the spread between the purchase and sale price of each individual transaction.
The broker earns from brokering, in other words from the meeting between traders who want to sell and those who want to buy.
However, a broker will not fail to provide you with the necessary online assistance to offer useful information for your continued success.
Don’t be afraid to ask
To open a trading account and trade on Forex you have to start by registering on your preferred broker’s website, assuming you are able to get all the information about the broker and the type of transactions you can partake in through them. These are the classic “terms and conditions”.
Don’t be afraid to ask for all the information you need, it is your right after all.
Go to the next lesson – Choosing a Broker