A number of traders use the services of a brokerage firm to handle the majority of their trades. This is just as true with forex. Forex brokers provide traders with a trading platform (or dealing station) that allow them to buy and sell foreign currencies. Some traders utilize several brokers, as even the best forex broker can only handle a very small portion of the volume of the overall foreign exchange market.
Most major forex brokers will allow clients to use a practice demo account so that they can get a good understanding of what trading is all about. It is a wise idea to test out as many platforms and strategies as possible before deciding on which broker to use and which methodology to practice when you begin to trade real money. Forex.com, GCI financial, FXCM and Advanced Currency Markets (ACM forex) are popular forex brokerage firms, among many others. Study each broker and choose carefully.
Traders like the forex market because of the 24-hour accessibility and brokers help to monitor the trades at all times. However, hiring a broker is not a casual affair. Each firm requires a trading contract to prospective clients in order for them to begin trading the market, so be sure you really like the one you’re signing on with. This contract includes information on the risk and/or reward associated with trading, specifically the time between entering into a trade position and exiting it. The greater the time difference between the entry and exit of the trade, the greater the risk or reward.
A contract to buy or sell a specified amount of a given currency at a predetermined price on a set date in the future is called forex futures trading and requires a forex futures broker who is familiar with that part of the market. All forex futures are executed with a specific termination date, at which point delivery of the currency must occur unless an offsetting trade is made on the initial position.
If you’re interested in hiring a broker to help with your trading, do some research to find out whether that broker has a good reputation, practices a strong code of ethics, and has the functionality and tools that you are looking for.
Forextips.com is committed to educating the forex trader in all aspects of foreign currency trading. Click here to get information on a free forex webinar to help you maximize your success in the forex market.