Ever wondered which individuals knew so much about the buying and selling of currencies and who was behind the small stalls we see when we want to buy currencies? Does it just end there or is it a part of a larger, more sophisticated entity?
Many people do not know exactly what goes into forex broker services except the fact that the currency rate fluctuates every now and again.
Forex Broker services are actually part of a larger body called the Foreign Exchange Market. Forex brokers are therefore retail vendors who buy and sell assets and even services for a commission. Clients therefore through these retail brokers have access to the interbank market and can buy or sell currencies with their help. The Forex brokers serve as the intermediaries for these transactions for a small commission.
Over time, forex trade stopped being limited to only large companies, firms and banks who needed trade currencies for commercial purposes and began opening its doors to smaller and sometimes individual investors. With the rise of internet banking in the late 90s, traders could now set up accounts with limited assets and resources using the help of retail brokers.
In the 2000s, retail brokers took to bundling small private investors together in order to stream prices of major banks and then negotiate the prices of the trade in order to increase their profits. Because of the great number of investors, the banks were willing to bring prices down for for these individual investors for them to be able to make sales. These days, the prices that are set by the forex brokers are even higher than the ones set by the larger dealer market
Services Offered by Brokers in Forex Trade
With all that was said above it has become obvious that forex traders can only access the interbank through forex brokers. The forex brokers give these services in one of two ways.
- Dealing desk Trading
Here, the broker acts as a dealer and thus becomes the end point in trading. The trader establishes contact with the broker as the end person and trade can be done directly and even quickly.
- No dealing desk Trading
Here, the broker gives the trader direct access to the interbank itself for a fee.
In addition to buying and selling of currencies, forex brokers also do the following for their clients.
- Provide information and research services
- Chart the prices for their assets
- Give training for new traders
- Professionally manage traders accounts
With the arrival of forex brokers, opportunities have been opened up to private and individual traders that were formerly not there. They have also posed as an educational front to help individual investors make the right choices when it comes to investing their assets, give them training and even manage some of their accounts professionally. Although these services come at a price, one must agree that it has saved private investors the chore of getting sucked into a world most people know nothing about. The individual investor can now easily make bold investments knowing full well what their risks are. Forex trade is no longer being left to the big guys with the big guns. Everyone can participate now!