You could speculate on different currencies around the world via forex (foreign exchange) brokerage accounts, by purchasing or selling currency pairs which respond to economic developments all over the world. The forex market remains functional 24/5, as it opens on Sunday afternoon in the U.S. and closes once the stock traders have completed their business on Friday afternoon. A large volume of currency is traded around the world that equals over $6 trillion per day as of 2022. To put this into perspective, this is much bigger than the stock or bond markets of the world. Visit MultiBank Group

Forex traders are able to take long and short sale positions on different currency pairs, which help in determining the exchange rate between two different legal tenders, such as the euro (EUR) and the U.S. dollar (USD). A long position is when you have a trade that earns as the exchange rate increases while short sale profits when the rate goes down. Contrary to stocks, a trader would not borrow money or securities from their broker in order to be able to open a short sale position, but they’d be liable to pay a rollover fee.

 

Forex brokers could have different types and could vary from the most legitimate brokerage firms to illegal betting houses. Forex traders, be it amateurs or seasoned players must pick their brokers carefully to make sure that their money is in the right hands. Remember that even though a majority of such brokers typically have the same level of access and qualities in the foreign exchange market, there could be remarkable differences in their methodologies and policies.

Every broker also stands for another level in the industry. There could be the ones who showcase better expertise in the field and have direct access to the market. While some may be distant with nominal market connection. Carrying out proper research about various kinds of brokers is important when it comes to boosting your chances of opting for a broker who would be able to change your game so you could be a successful forex trader. Here are some of the different types of brokers who operate in the forex market. 

 

1. Dealing Desk (DD) 

This broker is often known as a market maker. Dealing desk brokers or market makers typically offer fixed spreads. A majority of such brokers function by opting for a quote that’s below or above the real-time market prices at a certain point of time. Working with a dealing desk is a good idea for amateur as well as seasoned traders who don’t want to directly trade with liquidity providers. Dealing desk brokers are often paid via spreads.

 

2. No Dealing Desk (NDD) 

No Dealing Desk forex brokers let forex traders access the interbank market directly. A genuine NDD broker would not need the re-quoting of prices. It basically means traders have the opportunity to trade after any economic announcements are made without worrying about dealing with any restrictions. Working with NDD brokers helps in using low and unfixed spreads. Given that the spreads are not fixed, the spread values could increase drastically if the market turns volatile after a key announcement. To be able to earn, NDD brokers may choose to hike the spread or demand a commission on every forex trade. 

 

3. Electric Communication Network (ECN) 

Such brokers provide as well as display actual order book details which typically feature processed orders along with the prices which various banks in the interbank market may offer. A majority of ECN brokers operate by providing information to the majority of market participants in the forex market to boost transparency in the market. A commission is charged on every  traded volume so they’re able to sustain an income as they work with different traders. 

 

4. Straight Through Processing (STP) 

STP brokers have the ability to directly pass trading orders into their liquidity providers. They don't even intervene in order to execute transactions. A majority of STP forex brokers work in tandem with many liquidity providers. 

STP brokers who work with several liquidity providers could even help their traders get better opportunities to do well in the forex market. 

If you’d like to be successful in the foreign exchange market, ensure that you opt for a broker who can offer you necessary services that are safe and devoid of any fraudulent activities. 

 

How to Choose a Forex Broker

Selecting the right forex broker would involve asserting the kind of investor you are as well as what your aims are to invest in currencies.

Every broker who offers forex investments has pros and cons. A few significant factors to take into account are regulation, the degree of security that these companies could offer as well as the transaction fees. Security features offered by one broker would be different from that of another. A few brokers would offer integrated security features such as two-step authentication so hackers cannot attack your account. 


Several forex brokers are regulated but that doesn’t imply that all are. As a trader, you must be cautious of unregulated firms.

Brokers may even have different platforms along with different required account minimums as well as transaction fees. Before you get onto a trading platform, you should have a budget in place to support your forex market investment life. Assess what would you like to invest, how much fees are comfortable paying and what will be your personal targets. You need to look at many different aspects to determine which platform works best for you. Ensure that you bear in mind all factors that could affect your trades. 

 

Prior to giving your money to any broker, carefully analyze their funding and withdrawal procedures. While some might need long waiting periods till you’re able to trade as you add funds via checks or wire transfers, whereas others would demand hefty fees on withdrawal or account closures. Account closure specifically could be stressful if a broker demands a lot of paperwork or redirects you to different representatives so you change your mind.