Who are Forex brokers and dealers?
Forex brokers or dealers? Difference and description
Forex brokers as well as dealers provide the opportunity to make trading transactions in the financial markets. Forex dealers make transactions with customers on their own behalf and at their own expense. Forex = broker conducts trading operations on behalf of and on behalf of the client. Forex broker income is a commission, the dealer income is formed due to the difference (spread) between the purchase and sale prices of currencies and securities. However, a good forex broker brings the client’s money to the real market, while the dealer can pay the client out of his own funds. At the same time, Forex brokers often perform the functions of a dealing center.
Trading: Through a forex broker or dealer?
Thanks to the existence of Forex dealers, anyone with minimal capital can take part in currency trading in the market. Dealer working conditions always imply the possibility of margin trading and leverage. Forex brokers often work on behalf of large financial institutions and companies, operating with significant financial resources. Forex dealers more often work with individuals – traders.
How do Dealing Centers work?
The activities of dealing centers and brokers of Forex companies are regulated by law. To work in the Russian Federation, a dealer must obtain a Central Bank license and comply with a number of requirements established in Russian law. The presence of such a license is evidence of the reliability and integrity of the company. Access to trade on the market is carried out via the Internet using special software – a trading terminal. Teletrade Group provides its customers with access to Forex trading through the popular, reliable and time-tested MetaTrader 4 platform.
Forex trading volumes are calculated in lots. One lot is equal to 100 thousand base units of currency. So, in the USD / JPY currency pair, the base currency (or the currency for which the product is bought is the Japanese yen) is the US dollar, therefore, one lot of the currency contract for this pair will be $ 100,000. This amount should be available to anyone who wants to independently enter the forex market. But not everyone has that kind of money. Those who do not have enough funds to trade in the whole lot on the market can use the funds provided by dealers, that is, to make transactions through the margin trading mechanism. Virtually all retail customers – individuals – work in the market using this mechanism.
Profit and its extraction of dealer companies?
Forex dealers are intermediaries in the implementation of transactions for the sale of currencies in Forex. From this activity they receive their main income, which is formed due to the spread, or the difference between the purchase and sale prices of foreign currency, or the direct payment for a completed trading operation. Therefore, companies are interested in the activity of clients, in that they carry out as many transactions as possible and receive profit from them.
How to choose a reliable Forex dealer ?
For those who are just starting to trade, the key step is to choose a company providing Forex dealer services. With the help of this company, trading operations will be carried out. An independent choice can be made so – to study the top dealerships. For the measure of reliability, the number of foreign exchange transactions is established. Read company history and analyze for accuracy. The next step will be the establishment of terms of work in the Russian market, as well as examine independent reviews. Forex dealer must have been present in the market for a long time, have authority in the professional community, and also obtain from the Central Bank a license of a professional participant in the securities market.
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To conclude a framework agreement, the client is obliged to confirm that he is familiar with the following risks associated with the conclusion, execution and termination of obligations under the framework and individual agreements:
1. The risk of loss to an individual as a result of changes in foreign exchange rates (currency risk).
2. The risk of loss to an individual as a result of non-performance, untimely performance or incomplete performance by the Forex dealer and (or) the bank in which the Forex dealer account is opened, financial obligations to such an individual in accordance with the terms of the Agreement and Separate Agreements (credit risk )
|3. The risk of loss to an individual as a result of a violation of applicable law and (or) internal documents of a Forex dealer by employees of a Forex dealer, a malfunction (failure) of software and hardware of a Forex dealer and (or) individual, a mismatch of software and hardware of a forex dealer to the nature and volume of transactions it conducts, transactions by a third party on behalf of an individual as a result of receipt by such a person randomly or as a result of his||deliberate actions of unauthorized access to the possibility of making such transactions on behalf of an individual, carrying out operations by an individual that are not in accordance with his intentions, for reasons related to insufficient experience of working with this individual with software and hardware of a forex dealer and (or) making it random actions, as well as the result of external events (operational risk).|
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