Learn Forex Trading: Forex Brokers
What Is a Forex Broker?
A Forex broker is a financial service company that allows you to buy and sell foreign currencies on the foreign exchange market. The truth is, you can’t access the Forex market without them! Besides researching the Forex market, finding a broker is certainly one of the first things you should be doing as you learn to trade. If you are a Forex beginner and you’re not sure where to start looking for information about Forex brokers, then this is the article for you.
What Forex Brokers Do
When you trade on the Forex market, you buy and sell currency pairs, which are the currencies used by nations around the world and which have values that fluctuate daily compared to the value of currencies in other nations as those countries’ economies rise and fall. Forex brokers help this process run smoothly by managing accounts and confirming trades. It’s a big job to make so many trades, but the work can be done in seconds, so your account will constantly be up to date as you look for more currency pairs to trade.
- If Forex trading is about exchanging foreign currency, do you need a broker to manage that for you? Technically, there is a way to exchange foreign currency on your own. If you visit the airport, you can trade one currency for another at an airport Forex kiosk specifically made to exchange one currency for another. At the same time, you travel, which is the same basic principle that the Forex market is founded on.
- However, you may rethink the appeal of trading without a broker if you consider driving to the airport and possibly spending hours waiting at the kiosk daily. Additionally, these kiosks may charge high fees, which can drop your profits considerably compared to trading on the Forex platform directly with a broker’s guidance. At Guerrilla Trading, we’d recommend opening an account with a broker.
Forex brokers grant you access to the Forex market’s trading platform (typically the MT4 for beginners, though there is also an MT5 and several other platform options). When you trade on the Forex market, a good Forex broker will keep an eye on the money in your account, and they help to manage your profits and losses while you trade. If you still have difficulty envisioning what a Forex broker does, you can also consider your broker an extra line of security protecting your funds. For instance, if you need to ask someone else to spend your money for you, it might give you an extra beat of hesitation that can help reduce impulsive spending habits!
Forex brokers can also provide in-depth advice about trading on the Forex market. However, if you have any questions or want personalized advice regarding the trades you should make, you may be interested in hiring a consistently profitable Forex mentor instead. A broker is there to process trades, while a mentor can more easily offer explanations about the reasons why they feel the way they do about the current market and the trades they are making; a mentor’s wisdom can be a huge help when you are starting and don’t have much experience in Forex trading yourself.
Your broker can also offer you leverage while you trade on the Forex market, which can help you make additional profit more quickly than if you consistently trade without leverage. However, it’s very easy to lose a lot of money by putting “all your eggs in one basket” when it comes to high leverage amounts (sometimes as high as 400 or 500 times more than the amount of money you have in your trading account). Guerrilla Trading recommends that you stick to leverage much lower amounts when you’re still learning how to trade in the Forex market. Losses will be much easier to manage when you trade carefully and don’t take unnecessary risks.
Getting Started
In order to begin trading on the Forex market, you will need to contact the Forex broker of your choice and open a trading account. At most brokerages, this should be very easy and the process is similar to creating most other online accounts. Once your account is open, you can begin making trades. In order to buy currency pairs, you open positions, and in order to sell them, you close positions. Communicate your requests with your broker, and they’ll handle the hard work for you.
- Not sure if you’re ready to start trading on a live account? Consider practicing first with a demo account and imaginary money. Try to grow your profits, but be warned: many people fall into a trap of taking high risks with their imaginary money because they have no attachment to losing it, which often carries over to their behavior on a live account. Once you are done with your demo account, take with you the information you’ve learned and trade carefully now that your money is real!
Can I Become a Forex Broker?
If Forex trading interests you, it’s possible that you can become a Forex broker yourself someday. You will need to obtain a brokerage license in your country and purchase your own trading platform. In order to offset the costs, you will most likely want to open your own business, which would require you to design a website for your business and begin marketing it, competing against the larger brokers out there.
For some people who love working with numbers and the Forex market, becoming a Forex broker may sound like a lot of fun and an enjoyable way to make your income. If you’re a Forex beginner, however, stick to simply hiring a broker instead of looking for loopholes to avoid them. Your broker is a necessary expense to learning to trade, and is here to help you, not work against you.
If you’re looking to learn Forex trading from long-time experts, consider signing up for a Forex trading course from Guerrilla Trading. We believe that learning Forex doesn’t need to be difficult and that information should be easily accessible to those who want to learn to trade. Are you looking for a community of fellow traders whom you can meet, learn from, and share questions and answers with? Become a member by joining today. You can even pick up a free ebook on our site to learn more about how to trade on the Forex market. We can’t wait to see you there!
