Currency trading is growing in popularity among retail investors diversifying from traditional investments such as shares. The opportunity to be able to speculate on major currency pairs such as EUR/USD and EUR/GBP is attracting increasing numbers of retail investors. The currency broker is the one who facilitates your buy and sell orders and also allows you to research into the markets to help you make more informed decision and of course allows you deposit more funds or withdraw your profits when you want to.
Access to currency market or as it is called forex (foreign exchange) market, the most extensive market on the planet is generally through an intermediary known as a forex broker. Online forex brokerage firms, known as houses, provide those new to the forex market with detailed research, advice and simulators to learn how to use their forex trading tools. To make an informed choice, it is advisable to trial several differing online forex broker houses and their trading tools to find the best fit for your needs.
To get an account with a forex broker, it is a bit like opening a bank account. It requires paperwork and identity verification and such. The whole process takes a few days. However, if you are just looking to test the waters, that is much easier, forex brokers offer demo accounts that you only need to provide minimal information to open. A demo or practice account allows you to get set up and get some practice trading until you're ready to get started with real money.
A currency broker takes orders to buy or sell currencies and executes them. Currency brokers typically operate on the over-the-counter, or OTC, market. This is a market that is not subject to the same regulations as other financial exchanges, and the currency broker may not be subject to many of the rules that govern securities transactions. There is also no centralized clearing mechanism in this market which means you will have be careful that your counter party does not default. Make sure that you investigate the counter party and his capitalization before you proceed.
If you have a professional trading strategy and feel comfortable speculating on leveraged products, forex certainly can’t be ignored as an investment class. Novice investors interested in speculating with currencies online can find many brokers offering demo accounts and educational resources to help them make their first trade. Trading forex with real money can be a rewarding experience. You could find trading currencies to be rewarding and intellectually stimulating pursuit if you find a broker that meets your trading needs.