You need a broker if you’d like to trade in the forex markets. So what is a broker exactly? What does a broker do?
Assume, you sell strawberries and in order to sell your strawberries, you will have to find buyers who are willing to buy your strawberries, since this is your customer’s location, you may go to the street market and search some people who are willing to purchase strawberries.
Some buyers and sellers meet on the street market. When you’re going to a street fair, though, you normally don’t see many people selling strawberries; they’re sold through a stall.
This is no different in the forex markets. You’ve got buyers and sellers of various currencies – they just need a meeting spot and a facility to purchase and sell the currencies.
However, the forex markets can be geographically distant for buyers and sellers. There needs to be a process that suits your desires to meet each other: and that’s where the broker joins.
The function of the Forex Broker
A broker is a platform where the buyers and sellers, like currencies, to purchase and sell instruments.
The Forex broker functions as a real estate agent for both you and the industry. In other terms, you will come to a broker and they will pair you with either a seller or a corresponding buyer to locate a buyer or seller of currencies.
Instead of merely being your intermediary for another buyer or seller, though, they are both your intermediaries and what you label as a “liquidity supplier.”
Provider of liquidity
We can begin with the simple definition of liquidity in order to clarify the liquidity supplier. Let’s say you want to transfer currency – to acquire some money.
To buy the currency, you have to sell the currency to another. To sell the currency, anyone able to purchase the currency from you must be there or we can say you must have a potential buyer for it. The term potential buyer means the person who is willing to buy your currency and he has enough money to pay you.
You will be willing to sell to as many customers who will be willing to purchase the currency from you. If more people are selling the currency and you want to purchase from them, so you will possibly afford the currency you want.
A market may also be liquid in another way. Let’s imagine, you want to purchase money, but instead of many people selling tiny quantities of money, some smaller sellers sell more. The business stays smooth. Sellers that deal with huge sums are referred to as liquidity suppliers because they simply offer market liquidity – big banks or financial firms that exchange large-scale currencies.
In other words, they transfer so much of money that you possibly sell to a seller of liquidity whenever you sell and you buy from a source of liquidity. There is always a group trading with you with too much money.
When a broker says that a liquidity supplier will move over your business, it means that the broker will balance your deal with a liquidity provider, such as a bank or other financial entity, which will take the opposite side of your business.
Forex Brokers in India
The Securities and Exchange Board of India ( SEBI), is a separate body that has the responsibility for ensuring the smooth operation of the country’s capital markets and brokers. It is the duty and responisbility of SEBI to supervise and manage the forex brokers operating in India. The Forward Markets Committee, which is the regulatory mechanism for handling non-exchange listed financial instruments, also controls the selling of derivatives. The Reserve Bank of India controls the Indian rupee but does not supervise the Forex broker.
How do I deal with a forex broker? What am I doing for Trade?
The broker can be imagined as someone you contacted to purchase or sell currencies in its immediate format. The creation of the Internet and applications now makes it possible, through the so-called trading network or commercial applications, to communicate with a broker.
The market for trade
A trading platform is a software component, and you can directly purchase and sell various currencies through this software. You can download the software from the internet and install it on your device. It is a trading board. This is what you use for forex trading.
However, there are forex brokers that effectively allow you to trade via a web browser, which will encourage you to trade without installing software from any device.
Final Note
You just want an online broker for trading forex. Trading in global financial markets with a reputable exchange broker is important. You may have unique specifications about the site, instrument, or analysis needs as a currency trader or investor.