When buying and selling commodities like money, buyers and sellers frequently use brokers. Through the forex broker’s intermediary services, you interact with the market. To put it another way, a broker will connect you with a suitable person if you need to find a buyer or seller of currencies. However, in addition to acting as a go-between for you and another buyer or seller, the broker can also act as a liaison between you and someone who is known as a liquidity provider, such as FXCM, a well-known broker for MT4 Forex Malaysia.
It’s critical to take into account the following things when selecting a forex broker:
Margin and Leverage
In order to trade higher quantities of currency, leverage enables you to borrow money from a broker. A small initial deposit—referred to as a margin—must be made, and the broker will then top it off.
If a broker, for instance, offers leverage of 1:10, it indicates that you can trade 20 times the amount of your margin. In order to identify the broker that best suits your investment strategy, it is worthwhile to compare the leverage amounts given by different brokers.
Although leverage can be a useful tool, it also raises your risk of losing money if a currency’s value declines.
The spread, which is the difference between a currency pair’s purchasing and selling prices, is how forex brokers often earn their living.
There are two distinct spread types:
1. Variable spread: Depending on the state of the market, the price difference varies.
2. Fixed spread: The price spread does not change.
When the market is active and it is simple to purchase and sell currency pairs, variable spreads are frequently less expensive than fixed spreads.