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Types of Forex brokers

Brokers are one of the most important elements of the Forex market. Be it individual traders or trading or financial firms, everyone prefers to opt for a professional and well experienced broker, who is aware of the nitty-gritty’s of the market and its trading trends.

Forex brokers can be easily divided into four categories, such as Market operators, Small brokers, Market makers and Kitchens.

Market-makers

These are the somewhat bigger financial firms which provide for smaller broker firms. They also offer tentative Forex trading prospects but only for those individual Forex traders who are willing to invest a trading capital of or more than $50,000 or so.
Although as compared to the multi national big financial companies, these firms are comparatively not that big and also offer a lesser cost of Forex market trading.

But as compared to the individual brokers, they generally have solid financial background and can be trusted for their credibility more often than not. Nevertheless, with their policy of offering their services only to those traders which are willing to invest a minimum amount of $50,000, makes them inaccessible to the greater part individual Forex market traders.

Market Operators

Market Operators is a group which comprises of big commercial banks and sizable financial companies which are accustomed to the bank policies and laws. The biggest advantage offered by these companies is that they offer their clients or traders with the maximum level of dependability.

However, as the Market Makers, Market Operators like huge financial firms and banks also demand an equally huge bill amount size. Such bills and huge amounts can only come from big international businesses or companies, thus making these huge banks inaccessible to the individual investor. The minimum amount required by these banks can go up to about 1 000, 000 US dollars.

Small brokers

These are small or individual broker firms which attract the new or individual traders. Since they themselves are not such big financial firms, they are willing to deal with individual investors keen on investing a little sum of money in Forex trading.

They accept to work with the traders willing to invest money from a few hundreds up to some thousand dollars. After taking quotations from a number of individual traders, these brokers then work with the market-makers further, to clear the orders of their clients.
This is because the market-makers have a minimum investment requirement of $50,000 or so. So to meet this amount, the local broker unites the funds from all his clients into one bill, addressing it to the market-maker. This way, individual market brokers deal with the market-makers and take the orders of the individual traders forward.

With all these type of broker organizations available to a trader to choose from, what the trader now needs to know is which type of broker suits him. One of the major factors to be taken into consideration for this would be the amount of money he is willing to invest into Forex trading market. And based on this criterion would he then come to know which broker or broker organization can he deal with.
Once a broker has been short listed, now left are the other factors like credibility, honesty, experience, skill, reputation and professional attitude on which the selected broker needs to be tested, before handing him over the initial investment money.

 

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