The foreign exchange market is one of the biggest markets globally, with an average turnover exceeding $6 trillion daily. Because of the huge market size, many smaller traders cannot access the market directly. This is where a forex broker comes in; acting as a bridge between the traders and the forex market. This is why every trader wishes to deal with the best forex broker for a good trading experience. However, almost every forex broker operates in a similar manner. In this article, we are going to cover some of the common facts about forex brokers that no one has told you about so far.
1. Brokers Never Control The Market:
A common myth among many traders is that brokers control the forex market. However, this is not the case. Surely, they offer you price quotes as well as let you place trades, but never ever they are responsible for price movements. The forex market is too vast for an individual trader to place trades. Only significant market players with huge funds can trade directly in the forex market. Others need the assistance of a forex broker. The forex broker acts as a middleman and helps you mirror your trades in the real market.
Traders, especially novice ones, should never believe that the brokers control the market; however, there are cases of brokers offering incorrect price quotes for their selfish reasons. Thus, it is recommended to always trade with regulated and licensed brokers because they never indulge in any unethical trading practices. Even if they do so, they could end up losing their license.
2. It Is The Brokers Who Need You More And Not The Vice Versa:
Even though you may not realize this, the broker is as dependent on you as you are on them. You are their client, and if they don’t have any customers, they would earn no money and soon go bankrupt. Brokers make money from spreads on every trade “you” place. Irrespective of whether the outcome is gain or loss, they make money off you. Now you may be wondering about those brokers who have zero spreads. Yes, it is true that there are brokers who offer zero spreads, but their alternative to make money is high commissions. Another way of making money is charging swipe fees for holding trades overnight.
Hopefully, now you know how important you are to a broker. So, it is best to choose the one that charges less fees and commission than others but not zero fees. How would they make profits if they had no fees?
3. Forex Brokers Don’t Want You To Lose:
It is very common to see people talking about how forex brokers alway want you to lose. While it might be true in some cases when the broker is a scam, the real ones will never want their clients to lose ever. They won’t gain anything if you lose, then why would they wish you bad? Whatever their intentions are, either way, they only gain profits via commissions when the trade ends.
Many traders take it upon themselves when their clients lose excessively and start to question their skills. Many tend to quit because of discouragement and constant losing in the market. This is why it is important to deal with only authentic forex brokers who have different programmes in place to encourage the clients. This encouragement can be in the form of educational materials and trading lessons, as well as allowing bots and copy trading. Such measures are very helpful in building confidence in traders so that they can trade efficiently. Hence, if you connect these dots, you would find that actually the brokers never want to lose but are only there to encourage and motivate you to trade better!
4. Brokers Don’t Necessarily Trade:
You might think that all the forex brokers are expert traders themselves; some even say that a few brokers trade against the clients. However, the truth is that they aren’t the market wizards which you think they are. In fact, many brokers don’t even engage in the market. Not all the staff employed by the broker needs to know everything about forex trading. You need to understand they exist only to provide trading services to you.
Conclusion:
Now you know everything you need to know about a forex broker. They are not the evil masterminds that many people perceive them to be. As long as you are working with a reputable and regulated forex broker, you are in safe hands.
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