Why we need a broker in forex trading,
when you learn Forex trading from the basics, you shouldn’t miss a complete understanding about Forex broker. As you might have known beforehand, it is difficult for an individual to enter the Forex market without a brokerage company. However, what is a broker exactly? And why we really need them in the first place? Without further ado, let’s check the explanation below.
A Brief Explanation about Forex Broker
Forex brokers are commonly a firm that supplies currency traders with a right to use to a trading platform which allows traders to purchase and sell foreign currencies. The role of a Forex broker is as an agent between interbank and you as a trader. Interbank itself refers to a network of a variety of banks which do business with each other.
Why We Need a Brokerage Company
The main reason why we need a brokerage company to enter Forex market is because we don’t have an access to the interbank. When there is no Forex broker, people who want to trade in Forex required owning a large amount of money and also a special relation with a bank network to purchase foreign currencies. Additionally, here are some other roles of Forex broker.
• To boost your profit
Forex brokers offer the so-called leverage which makes it possible for a trader with small fund to make greater money in the market. Thanks to the leverage, you are able to control a bigger amount of money in the market than how much you acquire in your account. However, you should use this benefit with caution since it may lead you to lose much too.
• Forex education
When the main job of a Forex broker is to give you an easy access to trade in the Forex market, many of them also help you to learn Forex further for your benefit. Nowadays, there are many brokers out there which offer free Forex education for their traders who want to upgrade themselves with essential resources that can improve their winning.
How a Forex Broker Makes Money
Since a Forex broker is going to facilitate you in trading, you can guess that it will cost you some amount of money in return. Forex brokers basically make their money by taking a piece of money when you place a trade through them. If you place a trade, your Forex broker will charge you several pips before certainly make your trade in the market.
For instance, the market is probably trading EUR/USD at 1.3100 of a buying price. However, when you enter a trade, your broker may charge you higher like at 1.3104. If you close your trade straight away, your Forex broker will collect the profit which is the different between the price you paid and the market price. In
Forex trading, this is called as the spread.
How to Find the Right Forex Broker
With the large number of investors interested in the Forex market, it’s no doubt that there are numerous Forex broker out there. While there are dependable brokers available, we cannot deny that some of them are not reliable for some reasons. As a result, we need to make sure that a broker you are interested in is regulated by trustworthy authority.
If you are seeking the right Forex broker, you can start with DIDIMAX. This brokerage company is regulated under its country authority called BAPPEBTI which specializes in regulating futures commodity trading. Additionally to excellent trading facilities, DIDIMAX also offers free education that facilitates you to learn Forex for more. So, if you need a good broker, don’t forget to consider DIDIMAX as your first choice!