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How Important Is a Forex Broker for Traders?

Have you ever thought of trading the forex market without a broker? If you’re someone who has always traded alongside a broker, this may seem to be quite absurd in the beginning. However, with the foreign exchange market, there are times when you may not need the help of a broker and when you can carry out trading on your own.

In case you think of traveling to a foreign destination, would you ever think of getting in touch with a broker to exchange your own country’s currency? Bet you wouldn’t! You would just visit your bank and do the task on your own. Such is the concept of trading the forex market without a broker. At times it might be advantageous and at times risky!

How to Trade in Forex without Seeking Assistance from a Broker?

Forex is equivalent to currency exchange. In case you wish to convert US dollars to Euros, you can just visit a bank and do the deed. Keep checking online about the current market quote and soon you can find out the market forecast of Euro and accordingly visit a bank to covert dollars to Euros. Once again, as the market rises, you may follow the same steps to convert the Euros to USD and make profit.

Have you heard of the concept of currency ETF? They’re financial assets like stocks which move in accordance with a sequence that underlies the forex rates. You can use currency ETF to buy a currency with higher interest rate to profit from the huge difference in the rates or you can wait for the right time for the currency that you bought to gain in value. This is one more way in which you can trade without the help of a broker.

Experiencing a Difference in Forex Trading with a Broker

Before you decide whether or not you wish to trade the forex market with a broker or without one, you need to establish your trading purpose. If you decide to trade without a broker, this comes with a benefit of not having to shell off any further dollars on paying commission to them. The total amount that you gain from the appreciation in currency is yours! Nevertheless, not working with a broker also has few disadvantages as well. Here are few differences to take note of.

  • Brokers usually offer you enough leverage through which you can trade big sizes with investing small amounts. On the contrary, losses incurred on 200:1 leverage will increase by a similar amount and you may also end up losing all the money.
  • Majority of the forex market brokers have the best possible tools to carry out the best fundamental and technical analysis of the market and they also offer you predictions. So, when you trade without the help of a broker, you will need to carry out your own analysis which might not be proper without the most appropriate tools.
  • In case of spot trading, you will only earn profit when you can sell an amount which surpasses the spread margin. Trading the forex market without a broker is interest-based and you’ll get paid on a monthly basis.

It is safe to conclude that although brokers may charge you commission from the profits that you earn, yet their services are often invaluable. Decide what suits your trading type and ensure making an informed choice.

About Abram Jayce

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