What is a Forex Broker?
After the 1970s, when the United States ended the Bretton Woods agreement that pegged the USD to gold, the foreign exchange market saw substantial growth. Initially dominated by institutional players due to high transaction costs and limited access, the market shifted with the rise of the Internet and online trading. Forex brokers made it possible for retail traders to enter the world’s largest financial market—the foreign exchange market.
A Forex broker serves as an intermediary between the trader and the market. By providing market quotes through various liquidity providers, it ensures that its trading platform offers the best possible conditions for its clients. In exchange, the broker charges a fee or commission, aligning its interests with those of the trader.
Types of Forex Brokers
Forex brokers are classified into two categories: dealing desk brokers (also known as market makers) and non-dealing desk brokers.
Dealing Desk
These brokers generate a market by replicating quotes from the interbank market and offering those prices to their clients.
Non-Dealing Desk
Non-dealing desk brokers route client orders directly to liquidity providers. From the liquidity pool, the best available quote is offered to retail clients.
Brokers operating as non-dealing desks typically offer dTrader (Electronic Communication Network) or STP (Straight-Through Processing) execution.
Note:
Some brokers operate as hybrids, combining both dealing and non-dealing desk features to provide a mix of services.
The type of brokerage determines the account types available, such as Trader Accounts, STP accounts, fixed spreads, variable spreads, and more.
Today’s Forex brokers have expanded beyond traditional currency trading. Modern Forex accounts now offer access to a wide range of global financial markets, including commodities like oil, gold, and silver, indices such as the Dow Jones and S&P500, as well as various other CFDs.
Furthermore, traders can access all of these markets through a single trading account, allowing for greater diversification and more trading opportunities.
Getting Started with a Forex Broker
Choose Your Country of Residence
Start by choosing your country of residence to begin the process.
Fill Out the Online Application
You will be redirected to our secure server to fill out the application form.
Log In and Begin Trading
Once you've completed the application, you will receive a username and password. Log in to the Client Portal, deposit funds, and begin trading.
How Forex Brokers Make Money
Forex brokers present a trading dashboard featuring instruments like currency pairs, commodities, cryptocurrencies, and indices, each displaying two prices: the bid and the ask.
The gap between these prices, known as the spread, is a primary revenue source. This fee for market access can be fixed or variable, depending on the account type.
Brokers with multiple liquidity providers can offer tighter spreads, whereas those using a single source tend to have wider spreads.
Since traders buy at the ask and sell at the bid, they effectively pay the spread each time they open or close a position.
For example:
dTrader and STP accounts feature variable spreads that mirror real-time market conditions. Fluctuations in the interbank market—from low activity to high volatility—cause these spreads to change throughout the day.
For example:
During major economic events like the U.S. Non-Farm Payrolls (NFP) release, variable spreads typically widen amid increased volatility and then tighten as the market stabilizes.
Commission fees depend on the account type. In some cases, a commission is applied per trade based on volume—the higher the volume, the larger the fee—while in other cases, no commission is charged, though these accounts typically feature wider spreads.
While brokers might utilize other revenue streams, the primary sources of income are typically derived from spreads and/or commissions.
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Access a broad selection of instruments—including forex, indices, shares, commodities, and cryptocurrency CFDs—all from one account.
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