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What is Broker in Forex? Here The Complete Answer

Brokers are companies with computer software links or telephone lines to banks around the world. It is the job of a forex broker to find out what bank has the highest rate for buying currency and what bank has the lowest rate for selling currency. broker no deposit bonus 2015

Using a broker makes it possible for banks to find the best deals available in the world. Forex brokerage firms, however this is not related to their own money but only commission fees for their services.

The government, is the most influential forex player, in addition to the central bank. In many countries, the central bank is an arm of the government and carries out its policies together with the government. however, some governments feel increasingly independent.

A central bank is increasingly effective in carrying out its duties to improve the economy. Regardless of how independent a central bank is, government representatives usually regularly consult with central bank representatives to discuss monetary policy.

So, the government and the central bank are usually one package in terms of monetary policy. This central bank often intervenes in the market for certain economic goals of the country.

Business People, are one of the biggest clients of these banks, those who are involved in international transactions. Whether these businesses sell goods to international clients or buy goods from international suppliers, they have to deal with the volatility of currency fluctuations. Uncertainty is something that management and business owners hate.

Dealing with foreign exchange risk is a big problem for multinational companies. For example: a company in Germany orders equipment from a factory in Japan that must be paid for in Yen 1 year from now. Since exchange rates can fluctuate wildly throughout the year, the German company won't know whether or not to spend more Euros on delivery.

One way for businesses to reduce uncertainty due to this foreign exchange risk is to go to the spot market and trade directly for the foreign currency they need. However, unfortunately, business people may not have enough cash on hand to make spot transactions or do not want to hold large amounts of foreign currency for long periods of time.

Therefore, business people often apply hedging strategies to lock certain currencies at certain price positions for future needs.

Speculators, instead of hedging so as not to be hit by price movements for reasons of international transactions, speculators try to get money by taking advantage of price fluctuations. One of the most famous speculators was probably George Soros.

The billionaire is very well known for his speculation on the decline of the British Pound who made 1.2 billion dollars in less than a month! Some critics say that people like this are responsible for the Asian financial crisis of the late 90s.

Well. Up here you have known a little (in general) about forex.

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