When new traders seek advice about how they should begin trading they are often disappointed by what they hear. Nine times out of ten they are told ‘Hire an introducing broker’. Their disappointed is understandable, after all many people become Forex traders because they want to become independent, and they don’t want to rely on other parties for their income.
The fact is though that trading through an introducing broker does not represent a compromise in terms of autonomy or quality of performance. An introducing broker does not tell their clients what trades to make, in reality they offer guidance only when it is asked for.
There are a number of benefits to working with an introducing broker. Aside from the expert advice they can offer, many also pay rebates on every transaction made. This is advantageous for new traders because it favors making a large number of small transactions. New traders like to trade this way as they do not have to risk as much and they can learn more about the trading of currencies by making a large number of transactions across a range of commodities.
Reputable introducing brokers usually have a large number of Forex contacts which they may share with clients. This means that traders’ sources of Forex information extend beyond the introducing broker to a number of established Forex figures. It also means that the client receives more attention in general as they are allied with a reputable Forex entity.
So why the controversy over the utility of introducing brokers?
Allow me to address one of the misconceptions about introducing brokers. There is some concern that because introducing brokers do not actually make trades themselves that orders placed with them may not be completed as quickly. First of all modern information technology means that communication between introducing brokers and the trading floor is instant. It is also worth remembering that in fact introducing brokers often receive priority of treatment from dealer\brokers due to the large number of clients they represent and as such their orders are often carried out more quickly.
So if you’re thinking about getting into trading forex allow me to reiterate ‘Hire an introducing broker!’, you can’t afford not to.