If you are new to trading forex & CFDs online, you may ask yourself, “what is the purpose of a forex broker?” More specifically, “do I need a broker to trade forex?” The answer to the this question is yes, you can trade forex without a broker and chances are you have traded forex before. As you’ll soon discover though, it’s probably not the type of trading you may have been thinking about.
We All Have Experience Trading Forex
If you’ve ever traveled to another country and exchanged money, then you’ve traded forex. Forex is simply an abbreviation for the term “foreign exchange” so whenever you have exchanged your US dollars for Euros or Australian dollars for Mexican pesos, then you’ve engaged in forex trading, albeit on a smaller scale.
The reason the above examples would be considered a “trade” is due to the fact that the values of currencies are constantly changing in relation to one another, so if you left a few Euro or dollars in your pocket after a vacation, you may be surprised to learn that they have either appreciated or dropped in value.
Exchanging Money vs Forex Trading
Those who are asking about trading forex without a broker are probably wondering if one can trade online forex without a broker. The answer to this question is no, and for a very important reason. The main advantage that forex brokers offer to investors is the concept of leverage.
The idea of leverage is simple. With a small deposit of funds, known as margin, you can magnify your trading ability. With 100:1 leverage you can trade up to 100,000 units of currency (EUR, GBP, JPY) without committing the full amount of money. Leverage always comes with risks, so bear this in mind.
The important distinction here is that without a forex broker, you would need $100,000 or the equivalent to make a similar transaction. In essence, that would be trading on 1:1 leverage, which isn’t what most investors are looking for. For the average investor this is simply unreasonable, so a broker is required to speculate in the forex market due to the leverage being offered.
Forex Consulting Services – Guidance in Selecting a Forex Broker to Partner With
One of the core services we offer is help in selecting a reliable forex broker to trade and partner with. If you require our assistance in selecting a reputable forex broker to open an account with, don’t hesitate to contact us today. We look forward to hearing from you!
