Those are beginner investor questions aimed at cutting potential expenses.
You make money from currency moves without brokers when you buy currency at a bank or exchange office and then sell it at a higher price. However, this is currency speculation, and it has little to do with investing in Forex assets.
If you want to become a serious investor, diversify risks, and make profits in a few seconds, then you can't do without a Forex broker. Read on to learn who a broker and a sub-broker are, what their functions and advantages are, and how you can do Forex trading on your own.
A Forex broker is a legal entity that acts as an intermediary between sellers and buyers or between traders and the Forex market itself.
Private persons aren't entitled to conduct currency trades on their own. All trading operations must be registered and conducted through a Forex broker.
Forex brokers' activities are strictly regulated and must be licensed. Currency market participants are retail traders, legal persons, and institutional investors. In particular cases, a broker itself can act as a counterparty in a trade.
Let’s figure out how to trade forex without a broker and what you will need for it. First of all, the retail trader should get access to the market through an electronic trading platform.
A trader's main instrument is a trading platform. It allows a broker to load current quotes, and a trader can analyze a market situation. In a trading platform, traders are opened, and orders to sell/buy currencies at a current price are sent.
You cannot get access to the trading terminal on forex without a broker. A broker usually buys a costly license to get the right to use a MetaTrader and pays monthly fees for it.
Then brokes develop the bridge to liquidity providers to transfer client’s trades to open market. You won’t be able to trade without the platform and ECN technologies that the broker provides to retail clients.
You can't simply take a bag full of money, come to an international bank and say, "I want to trade in the currency market." They will only suggest that you make an exchange operation at the bank's rate. Only a broker can provide you access to currency buy/sell operations.
In most cases, it can. However, there are some exceptions. Regulators impose some limits in some countries. As a result, access to foreign brokers is banned, and trading without a broker is impossible.
Traders themselves can't open an account with a foreign broker that isn't licensed by a local regulator. This system is true of the USA, Japan, and Indonesia, where strict rules apply to CFD trading. Using a sub-broker solves the problem:
Thus, the trader's main broker acts as a sub-broker: not being the US market member, it resells another broker's service (prime broker) to the client. However, this scheme has two drawbacks: the more counterparties a trade has, the higher the risk and commissions are. Continue reading Litefinance.com...