Forex Brokers, provide currency traders access to a trading platform that allows them to buy and sell foreign currencies. They handle a very small portion of the volume of the overall foreign exchange market.
Forex Brokers service the currency needs of corporate and private clients, a Forex Broker works to achieve the best rate for their clients, and they have access to comprehensive market information which provides real foreign exchange rate data, news and analysis of different events that cause currency rate movements.
Brokers needs to keep themselves update of all market news and also general news as their clients look in them guidance on exchange rate movements and for strategies to manage their currency exposure, therefore a Forex Broker has to have widely knowledge of what is happening around the globe to offer the best advice to clients.
Forex brokers are specialists, who play the role of intermediaries between different banks; the broker will provide the service of financial intermediary for a commission. They have online links with banks around the world to recognize which bank has the highest bid.
Also, a Forex Broker undertakes a deal of technical analysis, they have to use charts to predict future trends from past movements on the assumption that movements reflects markets beliefs and past patterns can rationally predict ups and downs.
Forex Brokers are divided into two categories: ECN (Electronic Clearing Network) brokers are one of the categories and the other ones are known as market makers. Both provide retail investors with the opportunity to engage in the currency markets
The first category, ECN provided more direct access to the interbank market, where institutional foreign trading takes place. They keep their spreads thinner to remain competitive; usually they make their profits of the fixed commissions per trade that they charge their clients.
On the other hand market makers will offer a wider spreads than the ones offered by an ECN, thereby more favorable to themselves. Market makers make their profits of the difference between the buying and selling process of currency pairs not of commissions charged on the orders placed by their clients.
As a Forex Broker, remember to provide personal, friendly and cost effective service, be a highly competitive broker to your clients, and use a direct access to foreign exchange market intelligent and real time exchange rate information, to always be the best option for you clients.