Advantages and Disadvantages of Forex Brokers – Plunging into the world of trading is not as easy as one might think. There are many things you should know if you really want to become a professional trader. One thing you should know is which Forex Broker should be used in the trading world. Without a Forex Broker, the trades that you run will certainly be difficult to succeed.
Forex Brokers are one of the trading service providers who have an important role in building the trades that you will do. The chosen Forex broker must really have good quality. Some of them such as the service system that is carried out, fast response, has complete facilities, and so on. That way, the trades that are run will be easier to develop.
In addition, you also have to know about the advantages and disadvantages of Forex Brokers so that you are not misguided in choosing. Even the selection of a Forex Broker will be very effective if you use the best. Some of the best Brokers out there like USA CFTC and NFA, UK UK FCA, Australia ASIC. Some of the lists above are one of the best brokers in the world.
If there is a Broker that is not regulated, usually the Broker has a deficiency in it. In choosing a broker, there is also no need to hesitate, or you can also ask the regulator who handles the broker area around your own area. Even so, you also have to be careful in choosing a Forex Broker because now there are so many scammers that appear. You can find out in advance what a trusted Broker looks like.
Each Trading service provider has different offers from each other. You can conduct a survey between one broker and another regarding the price offered. Usually the price has been determined based on the facilities provided. The more complete the facilities provided by the Forex Borker, the higher the price. Each Broker has its own indicators with various advantages and disadvantages in it.
There are two kinds of Forex Brokers that you need to know, namely Market Maker Brokers and ECN Forex Brokers. Some of the advantages and disadvantages that you should know about Forex Brokers are as follows!
Advantages and Disadvantages of Forex Market Maker Broker
Market Maker Broker is one of the brokers who determine prices based on what they think is good. When you open a buy position, the Market Maker Broker must Sell. Vice versa, if you open Sell first, the Market Maker Broker must Sell. That’s why Market Maker Brokers dare to provide Fixed Spreads.
In addition, you can also do other strategies, namely headging our positions with other traders. Here there is a conflict between Traders and Brokers, however, not all Market Maker Brokers cheat. Most importantly they are not properly regulated by a credible regulator. Some of the advantages and disadvantages of Forex Brokers are as follows!
- Excess
One of the main advantages of the Forex Market Maker Broker is a completely complete trading facility. If you use a Market Maker broker, you will get several facilities such as news feeds, free EAs, and many others. Complete facilities will certainly provide satisfaction for Trading users without having to be confused about what they need.
Apart from that, another advantage is that trading movements are quieter compared to other brokers. So, it will be easier for you to run it. You also don’t need to be volatile as is the case with ECN brokers.
- Lack
The other side of the advantages, of course, there are disadvantages that make this Broker Market less liked by people. One of them is the conflict between the trading owner and the broker. This can lead to fraud committed by the broker.
In addition, the price issue is also less friendly when compared to ECN Brokers. You need to spend more if you want to use Broker Market Maker. On the other hand, there are restrictions regarding the use of the Scalping Strategy.
When there is fundamental news, slippage or price jumps can occur. This will result in a stop loss that is easy to hit. Especially if you use a Pending Order, the stop loss will certainly be hit faster. It also happened because of fraudulent actions that caused the stop loss to be hit quickly.
Advantages and Disadvantages of ECN Forex Brokers
Using ECN Forex Brokers, you can interact directly with the market without going through their intervention. The working system of this ECN Broker will bring together the seller and the buyer directly. At the same time, they will be brought together in a system that is already done in Trading.
In addition, they also benefit from the large spread. Later they will make the spread that is marked up and also the cost of the transaction. The spreads used by ECN Forex Brokers often change. This depends on what kind of market conditions. Spreads can be smaller in highly liquid currency pairs such as EUR/USD and GBP/USD.
Here are the advantages and disadvantages of ECN Forex Brokers!
- Excess
When it comes to pricing, ECN Forex Brokers are much cheaper than Market Maker Brokers. You don’t have to spend a lot of money if you want to use an ECN Market Broker. Even so, you will not be disappointed with the quality provided by this ECN Forex Broker. The broker is really very superior in quality.
On the other hand, the use of the Scapling strategy is also allowed if you use an ECN Forex Broker. This strategy will be very effective to achieve big profits. Surely you will be very satisfied with the Scaling strategy available at the ECN Forex Broker.
In contrast to Market Maker Brokers, the movements of ECN Brokers are more volatile. It will be very suitable for scalpers when using this one broker. In addition, there will be no price jumps if you use an ECN Broker. These advantages will certainly provide great benefits for you.
- Lack
There are many advantages that you can get when you use an ECN Forex Broker. However, you will also get some shortcomings from this broker such as bonus facilities and incomplete promotions. The facilities are already very qualified, but promotions and bonuses from this broker will be very less for you.
On the other hand, financial problems as an initial capital requirement will make traders think twice. Usually the initial deposit requirements for this Broker are higher than for Market Maker Brokers.
That’s some information about the advantages and disadvantages of Forex Brokers that we can convey. Hopefully useful, thank you.