Main characteristics of Forex Brokers

Now we know how to choose the instrument to trade with and how to set up the parameters of an order (operation). There is one problem – we can’t place it ourselves. Nobody will let us enter the market directly as we are just “small fry” players for big banks and huge corporations. So, that’s where brokers play a part in the game: by providing customers like us with the possibility to trade in the Forex market.

• A set of instruments. How many currency pairs does your broker have – 5, 10 or maybe 50? Do they offer any other types of contracts like natural gas futures? What about Microsoft shares? It is very important for a trader to know that his broker has several interesting securities and instruments to offer.
• Spreads. The main characteristic of currency trading is the table of spreads. It is the difference between the price a broker is selling currency to his customers and the price he buys it from them. The smaller the difference the more profitable it is for a trader to work with a broker, and the more customers that broker is likely to have. Profitable spreads are the main feature in the competition of brokers for customers.
• Fulfillment. How quick is your broker in fulfilling their orders – one second, five, or maybe ten? Are there dealers in the broker’s office who manually accept or reject orders or is it done automatically? How many orders can be opened simultaneously? How soon they can be closed? Do big leaps and shocking market news influence the fulfillment of orders? All that is very important for a trader to know as it influences
  his ability to trade successfully. It’s one thing to click on the windows of your computer with a smile and another to yell bad language at it because everything has frozen and you cannot close an unprofitable trade.
• Services. What are the working times of your broker’s customer support department? Can you call them 24/7 and put your question to them in any popular language? Can you consult them on theoretical aspects of trading or – if online – the technical aspects of their trading terminal? Does your broker provide a roundup of important news in a real-time manner? How easy is it for you to fill up your account or withdraw money from it? How quickly does the financial department of your broker react to deposits or withdrawals? The services provided by a broker are usually the determining factor in a customer choosing their dealer. Services of the highest quality are the guarantee of a longterm partnership between broker and trader.
• Jurisdiction and regulation. What country is your broker registered in and do governmental structures regulate its activity? Recently, due to the appearance of hundreds of dishonest brokers these questions have become a burning issue. A regulated broker is a guarantee that there will be at least no ordinary deceptions. Though the services may remain bad and trading conditions can be very different from market conditions, the trader can be sure that his account will be alright and if the broker goes bankrupt his money will be returned by the government.
• A dealing company or simply a broker offers traders the ability to speculate in the Forex market even if they don’t have much initial capital. This is mainly because they can offer leverage to traders using margin accounts – as discussed earlier under ‘Margin trading in Forex’.

Some brokers use fixed spreads, and some of them use floating (changing in time) spreads. Floating spreads usually increase under the influence of big market changes caused by shock economic news announcements or other factors. Many brokers have the right to increase their spreads any time they want to without any notice about it. Our company Forex4you offers fixed spreads only, which appeals to many customers. A trader is always sure that today, tomorrow and the day after tomorrow the terms of the trade will remain the same.

All deals provided by brokers are for trading purposes only. This means that you can’t come to us and buy British pounds for a trip to Great Britain! Any currency you buy, you will have to sell later if you want to reap the rewards of forex trading.

A company carries out operations for its customers (traders) on its own behalf and at its own expense. Brokers set exchange rates on the basis of data from international information systems like Reuters, Tenfore and Bloomberg, and data received from subscriptions to professional exchange and currency information channels. To produce more accurate exchange rates brokers use more then one source of quotations at once and the result is displayed to traders.

Nowadays more and more traders deal with the Forex market by means of the Internet, sitting at their offices, at home or even outside in the country. All operations are processed throug special programs like MetaTrader, Dealing Desk, Rumus, iTrader, Trade Desk. Sometimes it is possible to trade via telephone but this method is not efficient and accurate