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What Can A FOREX Broker Do For You?
Who is a FOREX broker? FOREX brokers are
people who “cut the deal” on behalf of a trader. Unlike other
brokers who are paid a commission based on a predetermined
percentage of the sale, a FOREX broker gets paid with the
difference between a bid placed by the trader and the seller's
asking price for the same currency. This difference is known in
the financial circle as a spread, and is measured in pips. Pips
are also known as points, just to make it understandable to
anyone.
Theoretically, a spread equals an approximate
0.1% of the trade, which in pips is equivalent to 10. But in
practice, it is generally less than that. On major pairs the
common spread is around 1-2 pips. When the spread is low, the
trader pays less to the FOREX broker. A spread specified by a
FOREX broker could be either fixed or variable. A Fixed spread
is predictable and safe, while a variable spread means you only
make a profit if your risks and earnings are higher.
Not surprisingly, investing money to earn
money is the most lucrative business. So, if you want to earn a
good profit, it's always wiser to invest your savings or bonuses
in FOREX currency trading. One great advantage in FOREX trading
is shown through it's lack of regulatory commissioning by any
authority. This little fact gives you enough leverage to become
a highly profitable FOREX trader. Also, if you have the time to
monitor the markets and have a knack for recognizing market
trends, you can even make a handsome income by becoming a FOREX
broker yourself.
In the UK, the Financial Services Authority (FSA)
is responsible for monitoring all the money market institutions,
and so the FOREX brokers are required to register with the FSA.
Following a slightly different approach, the USA requires all
FOREX brokers to register with the Futures Commission Merchant,
regulated by the Commodities Futures Trading Commission. Each
country has its own financial regulatory boards and FOREX
brokers must comply with every clause they present as a
requirement. Although global currency trading is not regulated,
the FOREX brokers definitely are. This is to avoid unethical
practices by some self-proclaimed FOREX brokers, who are more
likely to book a cruise with your hard-earned money than to make
a profit out of it on your behalf. A FOREX broker cannot accept
a deposit from a trader unless he's a registered broker. The
registration proof can be obtained from the FOREX broker's
registration identification number.
If you are trying to secure a good FOREX
broker to handle your trading matters, you should first seek out
a comprehensive FOREX broker register. These FOREX broker
registers make it a point to list the crème de la crème in the
currency trading world. Commercial banks with treasury
operations, investment banks with dealer rooms and online
brokerages with a big market are included in this register.
The latest trend in the financial trade
market is the rise of online FOREX brokers. With many FOREX
brokers also preferring to publish trading prices and spreads on
their own websites, it's only a matter of time before everything
will simply switch to online FOREX brokering. This may take a
while though, because no matter what trends may show, we all
know how volatile the money market can be. Currently, an online
FOREX broker website is excellent for the retail trader, who'll
be able to monitor their trades by just sitting at home. |
