Forex Brokers

A forex broker is required to be able to trade in the foreign exchange market. The broker acts as a clearing house and executes your trades into the market. Online forex brokers provide trading platforms that are tied to live market data allowing you to initiate buy and sell orders instantaneously.

The broker will provide you with a margin account that provides massive leverage in the forex markets. Most brokers provide 100 to 1 leverage, some offer as high as 400 to 1 margin accounts. Essentially they lend you 100 times your money in order to buy and sell large currency positions. Because fluctuations in currency values tend to be relatively small, this massive leverage is required to eek substantial profits out of these small price movements. This kind of leverage can also be dangerous to those trading without risk control strategies.

Most forex brokers will have automatic fail safes that will close your loosing positions when you reach your margin limits. This prevents you from getting into a situation where you owe the broker more money than there is in your account. When choosing a forex broker pay attention to their fees and spreads.

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