A Forex broker acts as an intermediary between you and the Forex market and facilitates trade orders to be executed. Forex traders are provided an access to a CFD trading platform by the Forex brokers in order to buy and sell the currencies. These online Forex trading platforms provide an access to the trading account of a trader to execute and manage trade orders. Also these platforms provide access to a lot of useful information like charts, indicators, signals, Forex News etc.
The importance of Forex Brokers
The importance of Forex brokers to a trader is significant as he acts as an intermediary between the trader and the market. Without a good Forex broker it becomes very difficult for a Forex broker to trade effectively in the market. Therefore the selection of a good Forex broker is a must. Most of the Forex brokers generally provide a practice account in order to provide a good understanding of the market. It is therefore wiser to first check the reputation and service of the broker and then select one for CFD trading.
Opening an account with a Forex broker
For opening a Forex account with a Forex broker you need to first select a good Forex broker with reputation and safety of transaction and then open the account with it. It is the best way to open first a demo account with a Forex broker and check the service with him. Today most of the Forex brokers offer a demo account where you can play with non real money on a real time Forex environment. You can make trades and try different Forex strategies while you do not need to worry about any losses.
Forex brokers offer leverage too
Today most or nearly every Forex broker offers the leverage feature and it can vary anywhere from 10:1 to 100:1. A leverage ratio of 100:1 means that for every 1 dollar in your account you can trade with 100 dollars. Leverage can thus be helpful for making exponential profits due to the increased capacity of forex and CFD trading with forex, even with low amount of money in your account. The possibility to get bigger profit thus gets multiplied. Leverage is good but it can also increase the potential of high losses with the same degree as multiplied profits. Therefore leverage function should be used carefully and excessive leverage can result in losses.
The Forex brokers offer you a price that is slightly different from the price in which they receive. This is called collection of spread and spread is a sort of commission taken by the broker and is transparent to forex and CFD trading.
Thus a Forex broker is an important medium for every Forex trader to perform Forex trading in an effective manner and selection of a good and reputed Forex broker is important.