Just like at the stock market the large amount of transactions on currency exchange market is processed by brokers. Broker could be just a single person or an entire team of people but in both cases their main job is to process transaction for a commission. When you are considering to trade on Forex and have already done some research you will most likely ask yourself: do I need a broker to trade Forex? And there is no easy answer to it so let’s try and dig a little deeper.
Can someone start Forex trading without a broker?
First, we need to establish that Forex is a market that specializes in foreign currency exchange. Does that mean that whenever you go to the nearest bank and exchange foreign currency you are processing a trade? Well, no. Currency trading a series of transactions that might take place over a course of several days or even several minutes and the main reason for trading is not to get money you can use locally, but to get income from the difference between chosen currencies. Then do you need a broker for Forex or you can enter the market on your own? Technically you can start trading without a broker, but just because you can does not necessarily mean you want to. Instead of going through the list of disadvantages of trading without a broker I am going to give you the one (and only) advantage - you don’t pay commission. And it does sound sweet before you consider the advantages of actually going with a broker.
The role of Forex brokerage
The trustworthy Forex broker is a major part of your success when it comes to trading. So let’s focus on exactly what do you need a broker to trade Forex for:
- The broker will provide you with all the necessary tools and information. It is no surprise that trading is a complex process that requires a set of appropriate equipment and knowledge to be mastered. Getting them on your own is virtually impossible since you might simply overlook a tiny detail that will end up being crucial to your trade. A broker will not only supply you with all the essentials but also assist you with operating them correctly
- The broker has live quotes on several currency pairs at the same time. What that means is you do not have to search each pair before every time you place an order and therefore save time and stay focused on the trade
- Brokers provide you with leverage which allows you to trade with high amounts even if you did not invest a lot. And as you might have guessed the outcome will turn out more significant
- There is a team of traders ready to assist you by giving you advice on each specific occasion. It is always a great idea to get a second opinion when you are making any kind of decision and especially when your profit is at stake
- You will not feel as much pressure and stress when you have the ongoing support of a broker. It is also important as the currency exchange market can get pretty nerve wracking due to it rapidly changing nature
Take your time selecting a broker that fits you, pay attention to the services they offer and whether or not they have a 24 hour support team to assist you at any time of the day or night. After you start working with a broker one of the first steps will be creating a Forex account, which by the way is not possible without a broker.
Why you need a Forex account to trade?
Now that you understand why do you need a broker for Forex let’s quickly discuss what is a Forex account and why do you need one. The answer is very simple - you need to have an account in order to trade currencies, deposit and withdraw money. Opening an account consists of a few steps which you broker will take you through. It will include a brief questionnaire on your trading knowledge, submitting a copy of your ID and providing a minimum deposit. After your account is set up and ready to go you can start trading. Pay attention to details and make sure to utilize the assistant services offered by your broker.
