What Does a Forex Broker Do?
Nowadays, brokers in the Forex Market are no longer thought of as a person you call in order to have him buy or sell instruments on your behalf. With advanced communication networks as well as trading platforms, traders can now interact with their brokers in real time. This environment creates an opportunity for improved trading conditions, higher transparency and also lower trading costs.
A broker provides an online trading platform where buyers and sellers can buy and sell currencies. For example, you want to sell a particular currency, and you are in need of finding a buyer to execute the transaction. By consulting a broker, you are assured to be paired with a buyer and thus complete the currency exchange of your choice.
Most importantly, the Forex broker acts as an intermediary between several traders that are active traders in the markets. While this is the primary function of a Forex broker, it is however not the only one. Another important role is being a liquidity provider, a broker provides customers a fixed price range, e.g. a buy order and a sell order. This protects the price against price volatility, guarantees transactions, all the while making sure that buyers or sellers are able to find counterparties for your transaction at any time.
How Do Forex Brokers Make Profit?
Forex brokers work to make profits for themselves by facilitating speculation in the volatile Forex market. That means brokers make money through the spread – the difference between the bid and the ask price for a currency pair – and by charging commissions and fees for transactions on certain types of accounts.
At Forex4you none of the fees are hidden and everything is transparent.