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