If you have made your final decision to start your forex trading business, the next task to do will be searching for the right broker to partner with. There are two kind of brokerage service out there that is known widely by most traders. They are market makers kind of broker and Electronic Communication Networks kind of broker. The right broker will depends on your own trading strategy.
First of all, let us discuss about the market maker broker. This type of broker sets their own bid and ask prices that they got from the inter-bank or third party provider such as big hedge fund companies, banks, institutional companies etc. By being a client of market maker, it means that you are trading against the broker itself and not some other traders on the other side of that computer screen of yours. There are some advantages and disadvantages from using this type of broker. The advantages from using this brokerage service is that you are guaranteed to have your price go through and it go through with some fixed price or spread that you are getting from within your trading platform. The disadvantage is that you will not have the best spread price on each of the trades you make.
Now the ECN (Electronic Communication Networks) broker allowing you to have your trade with the best spread, meaning that you are getting the best price for each of your trade because you are trading directly from the inter-bank market where you are trading against other traders out there. The downside of this brokerage service is that there is no guarantee whatsoever of your trades will go through.
You have to be able to pick the right kind of brokerage service that is suitable with your trading style, market maker is the kind of brokerage service that is suitable for those long-term type of trader while the ECN is the kind of brokerage service that is suitable for short-term type of trader that trades intra-day trading or scalp trades.
There are many important decisions you should make if you are serious about trading the forex market. One of them is choosing the right broker that is suitable for you. You need to try to narrow down your choices from bunch of forex brokerage service you find out there and choose one from two types of brokerages that I mentioned above that is best and suitable for you based on your own trading strategy.
Should you are still new to the whole world of forex trading, you surely have to be partner with the best forex broker and use the most sophisticate forex trading software to help you get your trading better.
Author: Titiek Puspa
Keywords: Forex Trading, Trading Strategy, brokerage service, market maker broker, ECN, Electronic Communication Networks
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