People new to foreign exchange trading may be surprised to find that their forex broker may operate in some surprising ways. In fact, some companies offering forex trading services are not brokers in the traditional sense at all.
Traditionally a broker would work for you as a client, placing your buy and sell orders for you through their dealing desk and charging commission (for stock exchange transactions) or making their money from the spread (the difference between bid and ask prices) for forex trading. At one time orders would be placed by telephone. Now they are placed online, with you in full control of your account.
Foreign exchange brokers that cater to the retail investor are springing up all of the time all over the world. What should you look for in selecting a forex broker and how can you be sure you are getting the best?
Everybody starts out currency trading with hopes of having big returns and some of the publicity that you will see will make this sound almost inevitable. In fact of course currency trading is full of risk and many people get their fingers burnt. You could easily lose your startup funds, especially if you start trading for real too soon.
