Forex trading is one of the best investment options. But for a perfect guidance, you must choose a Forex broker who is skilled and has a clear idea of open market. It is this mediator or middleman that can be either a company or even an individual, who will take the instructions from the retailer to buy and sell their trades.
However, as they charge either depending on their services or more frequently depending upon the spread. But, it is every much important that you choose the one that offers a clear presence. It is however very much necessary that you do not be blown over by the shine and pomp of their online glory, as they can be utterly disillusioning.
To get a clear idea about what a Forex broker is and how it performs its tasks, you must know about their kinds. Different types of brokers:
- ECN Broker:
The ECN brokers or the Electronic Communications Network brokers are typically a matchmaker that communicates between a buyer and a seller. They are quietly friendly in terms of the fact that they take care of your interests. It is a very good idea to choose an ECN broker as they charge you fairly depending on the same spread that they are charged by the financial institutions. As there is no role played by the ECN brokers in manipulating the market price and also as they do not provide any liquidity, it is very much profitable to rely upon them.
- Market Maker:
A market maker is a Forex broker that provides liquidity, unlike the ECN brokers. They trade against you or take the position of an opponent. If you cost these brokers too much, in your next trading time, they will force a trading platform against you, by taking a larger position. This is how they make a market. This is however limited to their own trading platform and not on a global market standard.
- STP Brokers:
A combination of the two types of brokers that are the ECN brokers and the market makers, this Forex broker works with an extremely complicated market algorithm. Their algorithm helps good traders to continue with their trading, whereas, they also make a market for those unsuccessful traders.
In case you choose a market maker, it is clear and evident that your loss will be their gain. Although they will hardly admit this factor, that is the fact. Therefore, the best option that is probably the safest one is to trade with ECN brokers. As they will act according to your interest and not raise the market prices high or have the ability to manipulate this trading market, it is better to start our investment career with them.
However, if you want to take this risk and play huge, then you must step out of your boundaries and choose a Forex trader that can generate you maximum revenues and for that there is no better option that the market makers. So, before you blindly rely on one, have your senses activated and understand the brokers’ strategies and then proceed.