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  • A broker is what you need if you want to trade in the Forex markets. By looking at the overall picture of the marketplace, we can easily understand the functions and roles that a broker plays, in the larger scheme of things. But what or who is a broker exactly? To better understand this, consider the following example: Let’s say you want to buy oranges, so you go to the market where they are sold. The oranges are the products that you want to buy, whilst the farmers are the sellers of oranges. For this matter, the market is the place where you can get them, because that is the place where sellers and buyers connect for oranges. So a Forex broker would be similar to a market stall, whilst there are of course other Forex brokers in the marketplace from which you can buy different products. This is similar to the forex markets. There are buyers and sellers of various currencies and they need a place where they can come together. While they can be miles apart, they need a mechanism that can facilitate the buying and selling those currencies and this is where a broker comes into the stage. In simple words, a Forex broker is a middleman, an intermediary between various traders who want to buy and sell foreign currencies.

    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.

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