Information for acquaintance about who are Forex Brokers
Forex brokers, who are they? What do they do and how do they earn? Why is a Forex Broker Necessary to Participate in the Currency Exchange Market? Why are Forex “kitchens” dangerous, and how can a trader avoid risks when choosing a Forex broker?
Forex brokers, who are they? What do they do and how do they earn? Why is a Forex Broker Necessary to Participate in the Currency Exchange Market? Why are Forex “kitchens” dangerous, and how can a trader avoid risks when choosing a Forex broker?
Until recently, the Forex market was available only to large corporations and other owners of solid fortunes. But today, thanks to Internet technologies, anyone can become a trader on the stock exchange. This will require a minimum capital of 500-1000 dollars, a little luck and an exchange intermediary in the person of a forex broker.
Forex brokers, their functions and control
The law prohibits individuals from entering into transactions on the currency exchange. Such operations require the participation of a forex broker. It can be both an individual and a legal entity with a special license in hand. A Forex broker acts as an intermediary between the investor and the world of big money, and ideally, its activities should always be regulated by the relevant government agencies. On the territory of Russia, such a regulator is the Central Bank of the Russian Federation.
In total, the licensing authority, including the Central Bank of the Russian Federation, issues three types of licenses:
- Dealership,
- brokerage,
- On the management of securities within the stock market.
The license is one of the most important documents for a broker. It confirms the professionalism of his actions. Without it, it is illegal to carry out activities in the field of stock markets. Therefore, a Forex broker that does not have a license from the regulator does not deserve an ounce of trust. His words and communication are empty words. And working with him is a guaranteed way to lose money.
Let's say again that in order to ensure greater security of an investor's investments in Russia, it is worth working only with a licensed Forex broker. In addition, according to the law of 2016, it is basically impossible to provide online trading services in our country without a permit from the Central Bank. Let's name four brokers who have the right to work on the territory of the Russian Federation:
- FINAM Forex LLC,
- VTB Capital Forex LLC,
- Alfa Forex LLC,
- PSB Forex LLC.
The forex dealer license from the Central Bank of the Russian Federation provides five basic principles that work in the interests of investors:
1) Regulation on "unqualified investor". This means that without the broker's certification of the financial literacy of the future trader, the latter cannot access the exchange. Experts believe that this helps to reduce losses and improve the overall position in the market;
2) Signing of contracts and identification of investors. The goal is to ensure the safety of market participants;
3) Cases of disagreement between the participants provide for solid grounds for appeals, and the Central Bank acts as a regulator and supervisory authority;
4) Transfers to PAMM accounts are prohibited;
5) Leverage limit to guarantee low losses.
A complete list of acts and documents regulating the activities of brokers can be found on the official website of the Central Bank of the Russian Federation.
Please note: be that as it may, the license from the Central Bank of the Russian Federation does not give full guarantees. The Forex sphere, even if all precautions are taken, does not cease to be a zone of increased financial risk. Be carefull.
What do you need to trade Forex?
Forex trading is carried out through special platforms. The most popular is considered to be MetaTrader 4 (MT 4). It has a wide range of functions available to the trader. Such as: performing operations, developing strategies, graphical analysis, using technical indicators, automation.
How do forex brokers make money? What is spread?
The Forex broker derives its profit from commissions from transactions in the form of a spread. This term in the field of Forex means the difference in the purchase and sale of each currency that makes up a currency pair. The spread can be either floating or fixed. To create the most favorable conditions for traders, brokers can cut the spread.
There are forex brokers that work on a fixed commission, which is calculated from the total volume of transactions. How profitable and unprofitable they are is not important; the main thing is quantity. The more of them, the higher the income of the Forex broker.
The most reliable are licensed forex brokers and banks. They conduct transactions on the real market, provide the investor with high order execution speed, low spreads, anonymity of transactions and access to the necessary information, including free consultation.
What is the "kitchen" of Forex?
In the Forex market, in addition to brokers and banks, there are so-called "kitchens".
“Kitchens” in Forex are dealing centers that receive their profit not from spreads, but from deposits. "Kitchens" do not provide access to the interbank currency market, but keep the invested funds at home, conducting all transactions exclusively within the company. Profitable trade of the client in this regard is undesirable, as it leads to losses of the office. To avoid them, tricks are applied: spreads are increased, trading conditions worsen, requotes are allowed (the inability to influence the deal). Such "kitchens" Forex can slow down or even block the profits.
Forex brokers, their functions and control
The law prohibits individuals from entering into transactions on the currency exchange. Such operations require the participation of a forex broker. It can be both an individual and a legal entity with a special license in hand. A Forex broker acts as an intermediary between the investor and the world of big money, and ideally, its activities should always be regulated by the relevant government agencies. On the territory of Russia, such a regulator is the Central Bank of the Russian Federation.
In total, the licensing authority, including the Central Bank of the Russian Federation, issues three types of licenses:
- Dealership,
- brokerage,
- On the management of securities within the stock market.
The license is one of the most important documents for a broker. It confirms the professionalism of his actions. Without it, it is illegal to carry out activities in the field of stock markets. Therefore, a Forex broker that does not have a license from the regulator does not deserve an ounce of trust. His words and communication are empty words. And working with him is a guaranteed way to lose money.
Let's say again that in order to ensure greater security of an investor's investments in Russia, it is worth working only with a licensed Forex broker. In addition, according to the law of 2016, it is basically impossible to provide online trading services in our country without a permit from the Central Bank. Let's name four brokers who have the right to work on the territory of the Russian Federation:
- FINAM Forex LLC,
- VTB Capital Forex LLC,
- Alfa Forex LLC,
- PSB Forex LLC.
The forex dealer license from the Central Bank of the Russian Federation provides five basic principles that work in the interests of investors:
1) Regulation on "unqualified investor". This means that without the broker's certification of the financial literacy of the future trader, the latter cannot access the exchange. Experts believe that this helps to reduce losses and improve the overall position in the market;
2) Signing of contracts and identification of investors. The goal is to ensure the safety of market participants;
3) Cases of disagreement between the participants provide for solid grounds for appeals, and the Central Bank acts as a regulator and supervisory authority;
4) Transfers to PAMM accounts are prohibited;
5) Leverage limit to guarantee low losses.
A complete list of acts and documents regulating the activities of brokers can be found on the official website of the Central Bank of the Russian Federation.
Please note: be that as it may, the license from the Central Bank of the Russian Federation does not give full guarantees. The Forex sphere, even if all precautions are taken, does not cease to be a zone of increased financial risk. Be carefull.
What do you need to trade Forex?
Forex trading is carried out through special platforms. The most popular is considered to be MetaTrader 4 (MT 4). It has a wide range of functions available to the trader. Such as: performing operations, developing strategies, graphical analysis, using technical indicators, automation.
How do forex brokers make money? What is spread?
The Forex broker derives its profit from commissions from transactions in the form of a spread. This term in the field of Forex means the difference in the purchase and sale of each currency that makes up a currency pair. The spread can be either floating or fixed. To create the most favorable conditions for traders, brokers can cut the spread.
There are forex brokers that work on a fixed commission, which is calculated from the total volume of transactions. How profitable and unprofitable they are is not important; the main thing is quantity. The more of them, the higher the income of the Forex broker.
The most reliable are licensed forex brokers and banks. They conduct transactions on the real market, provide the investor with high order execution speed, low spreads, anonymity of transactions and access to the necessary information, including free consultation.
What is the "kitchen" of Forex?
In the Forex market, in addition to brokers and banks, there are so-called "kitchens".
“Kitchens” in Forex are dealing centers that receive their profit not from spreads, but from deposits. "Kitchens" do not provide access to the interbank currency market, but keep the invested funds at home, conducting all transactions exclusively within the company. Profitable trade of the client in this regard is undesirable, as it leads to losses of the office. To avoid them, tricks are applied: spreads are increased, trading conditions worsen, requotes are allowed (the inability to influence the deal). Such "kitchens" Forex can slow down or even block the profits.