The one important entity that connects the forex market to retail forex traders is the forex brokers. Forex trade takes place on an interbank which can be simply explained as a process wherein the banks trade foreign currencies electronically with each other at different prices that may vary according to the banks that involved. The account used for this kind of trading is can be assumed as a bank account where the holder can purchase the currencies and hold them too for a certain period. Currencies are traded only in pairs. For instance, if the trader buys euros/us dollars, he is holding us dollar to becomes worth lesser than each euro in time. The euro should be worth more money than us dollars for the trader to make a profit. The role of forex broker here is to find a way for the trader to be included in a mix with the network of banks to purchase the pair of currency. They also find ways to let the trader hold the currencies in their account for some time. Before, the advent of forex brokerage system, for an individual to trade in foreign currency, they needed to have a large sum of money and relationship with a bank to be able to buy currencies.
The workings of a forex brokerage and how they make incomes in the market.
The brokers allow the trader a way to access the forex leverage and that is how they make money. Hence, this makes sure that forex brokerage will make money no matter if the trader wins or loses. In time many brokers even teach the trade to people willing to learn. The broker makes money by taking a percentage of the profits when the trader makes a trade. The difference or change in currencies between the pair of currency is measured as pips. The broker charges a unit of pips on the trader before putting the trade into the market. If the trade happens to close the trade almost immediately, the broker collects the profit that is the difference of the market price and the one paid by the trader himself, this sum is called as a spread.
How to find a brokerage service as a beginner
If a trader is searching for Forex brokers [โบรกเกอร์ forex, which is the term in Thai], they can start by opening a demo account with a reputed and trustworthy broker and try them out to assess how capable they are. One such brokerage platform is bus forex in Thailand. They are transparent and reliable. Make sure to check their website for more information.