The Foreign Exchange market is the arena where two different nations can exchange their currencies for a rate that they mutually agreed upon.
The forex market may be the same as the stock market with major difference that with a forex market, traders try to earn money through the increase in the currency rates. In forex trading, the currencies are normally traded in pairs.
The most important currencies used in forex trading are Dollars, Yen and Pounds. A forex broker may be an individual who acts as an intermediary between the buyer and the seller. They work for them for a small commission. A good forex broker is necessary to achieve success with the invested money.
One of the unique feature of the forex trading market is the many tactics that brokers are using to entice the traders to trade more. Some brokers may promise no exchange or no regulatory fees, no commissions or no data fees. To an individual who is new to forex trading, this may sound too good to pass up. Make no mistake. They’re here to make money and brokering is their business.
Of course, trading without transaction costs is a great advantage. However, sometimes, it is not the bargain that it seems. Sometimes it even sucks.
Fees vs commissions
I will now show you how forex broker fees are evaluated as well as the commission structures. This shall help you find one that will work best for you.
Forex brokers use three forms of commission and they are fixed spread, variable spread and commission based on the percentage of the spread.
The spread refers to the difference between the bid price and the ask price. The bid price is the price that the market maker prepared for you for buying the currency. The ask price is the price at which he is prepared to sell you the currency.
The forex broker may also act as a dealer giving online trading services to individuals or firms to help them speculate the changing foreign exchange rates. It is best to get help from professional forex brokers as with any other forms of trading. They understand the market better and can help you with all the questions you have in mind pertaining to the trade. They will guide you so you can start trading on your own. Many US and international companies recently starts providing software and other materials that traders can use to speculate the changes in the forex rates. There are normally trading rules which were put up by the forex brokers.
What makes a good broker?
A good broker should have the right software that will calculate the amount of profit made while trading currencies. They also provide excellent customer service. This shall help the client have an overall good experience with the trade. A good forex broker helps a beginner trader in the market even with a minimal amount and commission. They guide the client to have good leverage. They also utilize proper spread sheet analysis to show statistics and graphs of the current market.
For more information about forex broker rates, you may check this link CMC Markets brokerage rates.