What are the main functions of a foreign exchange broker? A forex trader is a financial professional who has access to the foreign exchange market in order to place an order on any currency pair. The broker is a service provider in the international financial market. In this role, he or she quotes the bid and offer prices for the foreign exchange pairs. This is known as the spread and is how market makers earn their revenue. The fees charged by brokers are in turn paid by the firms as compensation for executing trades in the Foreign Exchange markets.
The foreign exchange market is a global market, and the financial industry has several different tiers. Whether it is a bank, non-bank company, or a brokerage firm, each one contributes to the market. These firms have different levels of expertise and can provide a range of services to meet the needs of the client. However, all brokers are required to undergo extensive training and continue learning in order to maintain their licenses.
Traders in the Foreign Exchange Market use order matching mechanisms to place and execute orders. Not all retail orders are handled in the interbank market, and these are not included in official turnover estimates. In fact, only a portion of the volume is reported as spot forex, according to a survey conducted by the BIS in 2007. Therefore, the volume of retail orders is far greater than that of the interbank market.
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