The currency/forex market is the largest and most dynamic market in the world. About $1.8 trillion is traded every day. The word forex is derived from the word foreign exchange.
A broker is someone or a firm that acts as an intermediary for buyer and seller. Foreign exchange brokers are companies that trade in forex. Forex brokers are similar to equity markets except that they do not charge commissions. Forex brokers must have a license.
Forex brokers make money from spreads (also known as "pipes"). The spread is the difference between the prices at which a currency is bought and sold. You can hire the best forex brokers in South Africa from https://www.globex360.co.za.
The spread charged by different forex brokers can be compared. Most forex brokers make their pricing available on their websites in real-time or with a delay so that investors can compare spreads. It is vital, however, to determine if the spread is fixed or changing.
When the market is calm, variable spreads appear tiny and appealing, but when the market is busy, a forex broker widens the spread, meaning the investor will only profit when the market is favorable.
Forex brokers are usually associated with large banks or lending institutions. This is because the forex markets are heavily traded. Forex brokers are required to register with a Futures Commission Merchant (FCM) and are regulated by the Commodity Futures Trading Commission (CFTC).
A new trend among forex brokers is the rise of online forex brokers, which use advanced technology to provide trading facilities to "retail traders". With these features, anyone with a computer and an internet connection can trade the forex market.