An exchange broker, commonly referred to as a “foreign exchange” or “forex” broker is a company which accepts currencies to be exchanged for other currencies. These exchange brokers often offer these exchange services at a lower cost than banks. As well, depending on the exchange broker type, they may provide a platform for traders to conduct the trading between foreign currencies (forex trading). Brokerages of this type are plentiful and can be found offering their services everywhere in the world. Investors who wish to participate in the forex market can easily do so by signing up with a foreign exchange brokerage and depositing funds to be traded. Most exchanges simply provide the platform for a trader to conduct trades, they don’t often commence trading on the investors behalf. With that in mind, the trading of forex is a volatile market and should only be done by day traders who know what they are doing. However, the simple exchange services of converting currency for another can be easily done by anyone for a much better price than many banks charge.show more
Exchange brokers are very helpful and useful to not only traders, but ordinary people who simply need to exchange their money. For instance, if you are travelling to another country and require the local currency, an exchange brokerage is the perfect place to get the currency you need. See below the advantages exchange brokers have for non-traders.
Compared to banks, online exchange brokers can often provide people with better exchange rates than the banks, thus saving people money. The exchange can lock in certain exchange rates so that customers receive the best possible rate. As well, the fees added on to the exchange rate can be lower than many banks and many exchanges do not charge a commission.
Exchange brokers offer fast money transfer services that can be cheaper for sending large sums of money to other accounts, including international transfers.
Since exchange brokers are a business, they provide excellent customer service to keep a good reputation. As well, they have a wide range of business hours that are open longer than traditional banks.
Forex trading is a very popular method of investing all over the world. On average, there is over 5 trillion dollars traded on the foreign exchange market each and every day. See below some of the advantages foreign exchange brokers offer their clients.
The forex market is worldwide, so traders can trade in any which one of these markets. This also provides high liquidity, which means large amounts of money can be moved in and out of foreign currencies with little price movements.
Transaction costs are built into the price of forex. The cost is called the spread, which is the difference between the buy and sell price of a currency.
Traders can use leverage to their advantage which allows a trader to trade with more money than is actually in their account.