7 TOP FACTS ABOUT FOREX BROKERS

There is a lot of interest in the Forex market, and it makes sense considering how enormous the industry is. The Forex brokers are responsible for this boom, and it would be great to look at some of the interesting aspects of their business:

Becoming the best Forex brokers on the Market

Only the best Forex trading brokers https://topbrokers.com/forex-brokers  make money, while the rest just struggle to eke out some profit. Forex brokers make money from the spread charged to their clients, and the spread has to be very tight to maintain a competitive edge. Consequently, most brokers’ earnings are quite small actually and not that impressive. For the top brokers, though, they have many clients and the volume adds up to a good profit.

The real money is in the institutions, not with in brokers

There are certain brokers you probably don’t even know about, yet they make a lot more than your favourite broker. This is because most of them target institutions rather than individual retail traders. By focusing on high value transactions, they are able to make a lot more than if they only took spreads.

It’s all about partnership with Top Rated FX companies

According to regulation, brokers should not keep clients’ money in their own accounts, so they have to partner with a bank for that. Furthermore, liquidity and market quotes are all provided by the banks. This makes a broker’s success completely dependent on their relationship with the banks.

It’s all about getting the customers’ money by brokers

Above all, the brokerage business is about getting the clients to deposit money. The more money they have, the better standing they get with the banks and can make better deals with these banks. Besides, they can use that money for their own trading. This is why they entice you with first-deposit bonuses and call you often to get you to make that deposit. What they make from spreads is just a bonus.

Most of the FX action is in London

London is the world’s largest Forex hub with well known regulators, and the largest portion of Forex trades are executed there. As a continent, Europe is the area where the most Forex transactions take place, which also explains why so many Forex brokers are based there. Surprisingly, Asia is the second busiest Forex hub and not the US. The US used to be in second place, but stricter regulations made Forex trading in the US more difficult, with Forex brokers pulling out.

The retail Forex market is only a drop in the bucket

We all know that the Forex market is the largest financial market in the world, and also one of the most liquid, $5.3 trillion a day. What most people don’t realize is that the retail market accounts for a very small portion of the total volume transacted. The real volume is in Forex swaps, which multinational corporations and central banks engage in.

It doesn’t take much to become a Forex broker

When you look at the huge number of Forex brokers currently active, you have to wonder how much it takes to become one. The answer, not much. With just a bit of capital for the minimum regulatory requirements and a staffed office, you can have your very own Forex brokerage firm. This should be good news to anyone with the hope of starting their own business.