Making a clear decision regarding selection among the various types of forex brokers is something you have to make and understand before actually getting to the trading part. Picking out your favourites from different types of forex brokers can affect your trading career a lot. So, demand quality and don’t be lazy here.
Are you new in the investment arena and want to invest today? Well, there are numerous types of brokers in the foreign exchange market today. Their services can be easily accessed online.
Basic Types of Forex Brokers
1. Institutional Forex Brokers – these are types of forex brokers who are directly connected to the investment market. They basically consist of more than two hundred banks that form a consortium; representing about 50 percent trade at the Wall Street. Since only banks can participate in the trade the first time investors are not advised to invest here. They include ACM, www.saxobank.com, www.fxcm.com, AFEX and others.
2. Bucket Shops – these are brokers with no practical connect to the foreign exchange markets. They majorly deal in currency options and futures. They book the transactions made by retail traders but they don’t execute them on the exchange market. It is therefore a way of betting against retail brokers, hence beginner investors should only invest with bucket shops once they have a large capital base.
3. Institution Market Brokers – they have a very close connection to the foreign exchange market. First time investors can comfortably invest here but a huge amount of capital is required. Perfect examples include NASDAQ, FXALL and others.
4. Retail Market Brokers – they normally offer a limitless ranger of trading services in the foreign exchange market. Others are an intermediary for accessing the forex markerts while others are directly connected to the forex trade. Examples include Gain Capital, FXCM and others.
5. Book Makers – a book maker makes money on the difference between the spread. These brokers usually have no connection to the foreign exchange market. a perfect example is Delta Index.
In case you are investing for the first time an want to have all information about types of forex brokers, it is important to seek help from brokers with experience because these are professionals who already understand the market. Below are some of the benefits of forex brokers:
Helping You Learn – brokers are very friendly. They will assist you to learn more about the forex market and what you are expected to do. They explain to you’re the legal framework surrounding the forex market and the general business of stock trading.
Overseas Investment – most people have now started investing overseas. Access to a broker who is well versed with overseas investment could therefore mean a door to several investment opportunities
Funds Management – a broker is in charge of your funds either equity or mutual. The broker, therefore, manages all your investment funds in different foreign exchange markets at a small fee.
Portfolio Management – in case you are new in investment or you hardly have enough time to tend to your investments then you need not worry because brokers will do everything for you. They will spread out your investments in the most profitable investment stocks and bonds according to the level of risk you are willing to bear.