The fact is that recently, the largest developer of trading software for the OTC industry, MetaQuotes Software Corp., has published a message saying that it is stopping the sale of the most popular OTC trading platform MetaTrader 4 and related licenses. That is, now new clients cannot purchase the old platform, and existing ones - additional servers to it. At the same time, МetaТrader 4 brokers will be able to order additional White Label-terminals and count on full-fledged technical support.
Who are Forex brokers, and what role do they play in trading the foreign exchange market?
With the development of modern Internet communications, Forex trading has become available for most private traders and investors. Previously, only a select few (large corporations, banks or owners of huge fortunes) could trade in the foreign exchange markets, but now almost everyone can afford Forex trading. To do this, you do not need to make huge investments, it is enough to have $ 500 - $ 1,000 on your account for comfortable trading. To access the foreign exchange markets, you need to open an account with a Forex broker who is an intermediary between you and the foreign exchange market. Before you start trading on Forex, you need to understand who Forex brokers are and what they are for.
You can’t directly trade on the exchange - for any transactions, including investments, purchase and sale of securities, options and futures, intermediaries are required. Their role is played by brokers - companies with special licenses from the Central Bank. It is brokers who open accounts for individuals and legal entities and allow you to earn money on exchange fluctuations.
A brokerage account can be compared to a wallet where money and valuables are stored. The broker opens the wallet on behalf of the owner and conducts operations on foreign exchanges. A regular bank account is not suitable in this case - for exchange operations you need a separate "wallet".
The hard way:
Stage 1: Registration of a foreign company abroad
First of all, in order to become a binary options broker, you need to register a company abroad. Most binary options brokers are registered in offshore areas such as the British Virgin Islands, Belize, Saint Vincent and the Grenadines and so on. Unfortunately, the legislation governing binary options does not apply in the CIS, which makes legal registration in post-Soviet countries impossible. Registration in an offshore can cost from $ 2,000 to $ 10,000 depending on the country and the complexity of registration.
You can not decide on the career of a broker or trader? Both work with securities, but work differently, and these differences may be decisive for your choice of a successful career. In this article we will consider the features of the broker and trader and the requirements necessary to work in these specialties.
Brokers and traders
Although brokers and traders sell and buy securities, brokers also act as sales agents (both on their own behalf and on behalf of the brokerage company). Traders also work for large investment companies, they buy and sell securities for assets managed by their organization.
Without brokers, it is impossible to imagine a complete trading process in the Forex market. They provide traders with a trading platform through which their client can enter the market and conduct transactions. However, what motivates brokers to give an unlimited number of people money? Naturally, profit.
Spread and commission income
Theoretically, there are several ways to earn brokers. The first of them should be considered less worthy: professional Forex market participants, who are a kind of bridge between a trader and a market maker, can receive income from trading their clients by adding to the spread: in comparison with banks, the spreads of such brokers are slightly more monetary equivalent, due to which the dealing center and receives its income, without even using the commission for this purpose.
A CFD is an agreement between two parties, a buyer and a seller, which implies that after the transaction is closed, one party will pay the other the difference in the price of the asset that has formed since the transaction was concluded. As an intermediary between the trader and the market, CFD broker provides clients with a trading platform and provides other services necessary for operations.
CFD is a derivative financial instrument, or derivative, which allows traders to speculate on the change in the price of the primary asset. CFDs are not traded on a specialized platform, all transactions are carried out in electronic over-the-counter (OTC) format. Clients gain access to trade CFDs through brokers, which can also be called CFD quote providers.
Leverage is, in fact, borrowing capital in order to increase investment income. In the Forex market, a broker can “lend” capital to a trader, which allows the latter to open significantly larger positions, as if he has more significant capital on his trading account. However, this also means that the trader will incur losses in the same proportion, as if his capital was much larger.
Brokers can afford such operations, because their losses are limited by the size of the balance of the trading account of the trader. As soon as the loss reaches the amount of money in the account of the trader, the broker will close all of his current positions. This will prevent the trader from losing more funds than he has in his account, and he will not owe money to the broker.
Any novice trader who chooses an intermediary with whom he will trade, is interested in the question, what do forex brokers earn? The answer is simple - when a trader makes transactions, then regardless of whether they were profitable or not, he gives part of the money from each trading operation to a broker. Spread is the number of points that you have to give to the broker as a commission. You can familiarize yourself with the volume of the commission on trading instruments on the broker's website.