Responsibilities of foreign exchange broker A foreign exchange broker refers to a financial institution (usually a large bank) that provides the following services to its clients (usually hedge funds, small and medium-sized banks and commodity trading consultants):
Promote transactions between customers and banks that constitute the foreign exchange market;
Provide foreign exchange leverage;
Allow customers to trade in the name of foreign exchange brokers:
Providing transaction settlement, clearing and reporting services;
Save and manage customer accounts.
As you know, the transaction risk in the foreign exchange market is very high, so not everyone can do business with big banks in large financial centers. They just want to do business with people with good reputation. In this way, foreign exchange brokers have a place to play.
The whole process is like this. Suppose a hedge fund manager is a client of institutional brokerage business, and he wants to sell the 100 USD/JPY contract. First, he needs to find the best price for the sale contract. Then, he will place an order with an executive dealer (which can be a bank, other hedge funds or other units and individuals) who is willing to provide this quotation. At this time, it is not the hedge fund itself that establishes a direct relationship with the executive dealer, but its foreign exchange broker. Therefore, hedge fund managers actually trade in the name of foreign exchange brokers. At the same time, hedge fund managers will also inform their foreign exchange brokers of this transaction with other banks.
Once the bank offering the best price receives the trading order of the hedge fund, it will confirm the order and send it to the foreign exchange broker. So strictly speaking, although the transaction is initiated by hedge funds, the two sides of the real transaction are banks and foreign exchange brokers. After the two parties complete the transaction, the foreign exchange broker will trade with the hedge fund separately.
Finally, hedge funds hold short positions in USD/JPY and executive traders hold long positions in USD/JPY, so foreign exchange brokers have no positions.
Having said that, you may ask: Why are foreign exchange brokers willing to do this? The answer is only one word: money. Just as banks charge for electronic transfers, foreign exchange brokers charge customers a service fee. Customers must pay a certain fee when trading through foreign exchange brokers.
With the help of foreign exchange brokers, more traders participate in market transactions, so the liquidity of the foreign exchange market has greatly increased. This brings benefits to everyone, because increasing liquidity will increase the transaction speed and reduce the transaction cost and price difference.
Foreign exchange brokers are of good quality. Brokers must have good sales quality to gain the trust of customers if they pass foreign exchange to customers as an investment method. These qualities include the following characteristics:
1. sense of responsibility for the safety of customers' funds.
2. An understanding and concern for customer transactions.
3. Friendly communication and patient and meticulous work ability.
4. Happy and confident optimism.
Advice from foreign exchange brokers to novices. Beginners can learn the following suggestions:
1. If you want to improve your foreign exchange knowledge, basic knowledge is necessary. I suggest you read the following introduction of gold speculation and foreign exchange speculation, Japanese candle chart curve, super short-term expert and foreign exchange speculation A-Z, and you can also collect some information online. FXSOL global gold exchange network free e-books download free e-books containing various foreign exchange technologies.
2. Choose a mainstream platform (if the platform is supervised by FSA or NFA, it means that their operation and capital flow are more standardized and serious, ensuring the safety of investors. The FSA in Britain is the strictest, and FXCM and FXSOL are generally well-known.
3. Choose a good agent, preferably a first-class agent. At the formal level, word-of-mouth is slowly precipitating, so the operation is very formal. Without commission and other handling fees, timely service and professional quality will also ensure the safety of your funds.
4. It is very important to set stop loss and control positions when trading.
5, maintain a good attitude, profit is normal. Note: Of course, you need to know some basic foreign exchange knowledge yourself.
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