In the world of financial markets, a Forex broker acts as a central intermediary and facilitates the buying and selling of trading symbols for investors. If you ask, what is a broker? We must say that it is a bridge that connects you to trading platforms such as Metatrader and allows you to charge your account and withdraw your profit. These brokers play an important role by bridging the gap between traders and the global Forex market, where large financial institutions conduct both macro and micro currency transactions.
If you want to understand more precisely what a Forex broker is, we should mention that all brokers also offer a set of services in addition to connecting you to the global market, which makes the process of trading easier for you. Some of them, such as Coinoverse, provide you with educational resources related to Forex, as well as online economic calendars. but this is not the whole story; stay with us to fully understand what a broker is and what features it has.
What is a broker in simple words?
The Forex market operates around the clock and around the world as trading symbols are continuously traded in different time zones. Accordingly, Forex brokers are companies that provide platforms for trading those symbols around the world. Their customers include traders who monitor the price movements of various symbols (e.g. Euro to Dollar) and trade at the right time.
Most of the transactions involve currency pairs of the G10 countries, which are the ten most traded currencies in the world. Forex broker customers can buy and sell them at any hour of the day and night and fluctuate.
You should bear in mind the fact that the Forex brokers are the ones that provide you with different trading leverages and the higher the leverage, the bigger the profit and loss; therefore, it is important for your broker to provide you with high leverages. We are honored to present to you the highest trading leverage in the world which is 1:1000 at Coinoverse. With this leverage, your trading profit will increase one thousand times.
What is a broker account
Opening a Forex trading account on Coinoverse is very simple and can be done online. This step is necessary if you want to have a global account so that you can start trading with it. The only thing that you need to do is to deposit some money into your account as soon as you open it. The amount of the money is not important. Charge your account with as much as you want to invest. Even if your initial capital is small, you can make up for this deficiency with a high leverage. For instance, if you only have $100, with a leverage of 1:1000, you can trade with a capital equal to $100,000 and earn an unbelievable profit.
Read more: Calculating the trading volume in Forex
What are the most important points about Forex brokers?
When you want to figure out what a Forex broker is, you need to know what factors and elements help out to turn a platform into a powerful and reliable broker. we will outline several crucial factors essential for a reputable broker. A broker lacking any of these factors is not a good broker.
- Its facilities and features must be complete
Each Forex broker presents different features and facilities to its users. When comparing brokers, consider these four areas: leverage, commissions and spreads, initial deposit requirements, and ease of deposit and withdrawal. Leverages were explained earlier. Now we are going to talk about how the brokers charge you per trade as their commission fee or how they receive trading spreads as their profit; therefore, be mindful of the spread your broker earns as profit; Moreover, read its terms of withdrawal so that it does not become an obstacle for you. Especially since this issue is very important for Iranians and they may have problems with some brokers when withdrawing money and cannot authenticate.
- Its legality
When we talk about the best Forex broker, we should not only pay attention to its features; but it is also very important to see if this broker is legal or not. So, the first thing to check is its compliance with regulations. In order to see what legal documents the broker has; you should go to the About Us section of its website and see what certificates it has.
- It must have the important currency pairs
While there are many currencies to trade, there are only a few pairs that are traded with the most liquidity, such as: EUR/USD, GBP/USD, USD/JPY, and USD/CHF. The most important feature of a broker is the variety of its currency pairs. Make sure that the currency pair you are interested in is offered for trading at the broker that you have in mind.
- Costumer support
Forex trading is ongoing 24/7; therefore, it is important that your broker’s support is online and active 24 hours a day. Also, if you are not fluent in English, look for brokers like us (Coinoverse) that support Persian language and will solve any problem you have in the shortest possible time.
- It must have a powerful trading platform
A trading platform is your bridge to the Forex market. Be sure to ask what the Forex broker trading platform is and see if it has the technical and fundamental analysis tools you need. Although some brokers have their own trading platform, the most powerful trading platform is the MetaTrader 4 and 5 software.
What are the different types of Forex brokers? Introducing 3 types of brokers
In order to understand what a broker is, you need to familiarize yourself with the different types of it. Each of them works differently and they differ from one another in their market access methods. Read the following paragraphs to find out more about them.
- Market Maker Broker
What are Forex market maker brokers? Market-making brokers, also known as desk brokers, make markets for retail traders. They buy large positions from the interbank market and sell them to traders in smaller, more manageable sizes. These brokers allow traders to access Forex trading without the need for large amounts of capital. Market Maker brokers handle order execution in-house and offer benefits such as fixed spreads and fast trade execution without any delays. Their big problem is that their prices are different from the global Forex market because they do the buying and selling themselves.
- STP brokers
STP brokers that have direct access to the global Forex market, allow the users to gain direct access to the Forex market. This means that pricing and execution is done by the big banks that act as liquidity providers. STP brokers are designed for experienced traders who have the capital to take on larger trades. This direct access enables more transparent pricing and transaction execution for individuals.
- ECN brokers
Electronic Communication Network (ECN) brokers connect traders directly to the Forex market, but they do this by sending orders to various market participants, including larger brokers. While all ECN brokers use Straight Through Processing (STP), not all STP brokers act as ECN brokers. ECN brokers offer multiple prices from different sources, resulting in variable spreads.
Working in Forex without a broker
It’s impossible for an individual to directly access and trade on the Forex market without a broker, though some people do not want to believe this. Brokers are legal centers that operate under the supervision of the Forex financial market, and opening an account in Forex is only possible through them. Although you can open the Metatrader trading platform and see the price chart of various symbols without having a broker, It is impossible to trade unless this platform is connected to an international account that is created by a reputable broker.
Read more: What is LOT in Forex?
What is the brokers’ source of income?
While you are learning about how the brokers work, you might get curious to know what these brokers’ source of income is. It is believed by some people that brokers get money from the users when they register on their website, which is wrong. If you come across one of such brokers, you should know that they are trying to scam you. Registration in reputable brokers is completely free.
Forex brokers earn their income through a variety of mechanisms, each using a different aspect of trading activity. Understanding these sources of income can help traders distinguish reputable brokers from less reliable ones and understand what the best broker is and what features it has.
- Revenue from spread
The first source of income for Forex brokers is spread. Spread is the difference between the Bid and Ask rates of a currency pair, that is, the difference between the rate on the price chart of each symbol and the price at which the transaction is closed. For example, if the spread for the EUR/USD symbol is 1 pip, a broker may offer it to traders at 3 pips, earning the two-pip difference as profit. This method ensures that brokers earn money on every trade made by their clients.
- Leverages can also be a source of income
Leverage allows traders to obtain larger opportunities relative to their capital. Brokers offer high leverage ratios so that traders can increase their trading volume. While this increases the profit potential for traders, it also increases the broker’s income from the spread. This means a win-win deal that makes more profit for both the broker and the trader.
- Commission payment
While Forex brokers often do not charge a commission per trade, they may charge a commission for withdrawing or depositing money into an account. This means they take a small amount as deposit or withdrawal fee for themselves as profit. These fees are usually small, fixed amounts. Although these commissions are small and do not make up a significant portion of the broker’s profit, they help cover the operational costs associated with payment processing, because making and processing each payment is costly for the broker.
What are the different sections of a broker?
When you enter a Forex broker’s website and complete your registration, you will be presented with an account management panel that has various sections. In order to have a clearer view of what a broker is, we will explain all these parts below.
Demo account
A demo account, also called a simulated trading account, is a feature offered by many Forex brokers. This account allows you to practice trading in Forex in a risk-free environment with virtual money so that your main capital will not be at risk and that you can practice before entering the market. Here are the two main features of this account:
Virtual money: Demo accounts come with a pre-loaded amount of virtual currency, so you can place, buy and sell orders and trade different symbols just like a real account.
Momentary prices: Demo accounts are connected to real-time market data and the prices are in accordance with the global market; therefore, you can experience the Forex market fluctuations as they happen. This will allow you to test your trading strategies without having to risk your initial capital so that you can learn how to trade in the market.
Depositing and withdrawing
In a part of your panel in the broker, you will see a section marked as deposit/withdraw. In this section, you can top up your global account to buy different symbols. The interesting thing about the Coinoverse broker is that you don’t need to charge your account with dollars; rather, you can do this with rials. Once you’ve completed your trades, you can withdraw all or part of your funds to your debit card.
Read more: Forex Demo account; what it is and how to work with it
Support
Another section of your panel on the broker’s website is related to support. If a problem occurs or a question pops up in your mind, you can immediately contact the support team of that broker in this section. Reputable brokers in the world do this through the ticketing system. That is, you create a ticket with the subject of your question and its exact text, and your question is automatically sent to the experts. This is how they will answer you immediately.
Account records
The last major part of any broker is your transaction records. In this section, you can see the complete list of your deposits and withdrawals and check them if needed.
Conclusion; you have gotten to know brokers, now it is time for you to swim in money
In this article, we examined in detail what a broker is, what its features are, and how its different parts work. Now you are ready to enter the Coinoverse broker and connect to the global world of Forex and start one of the most money-making jobs in the world.
