Blog
What is an Online Broker?
An online broker acts as an intermediary between the buyer and the seller in trades whereby financial instruments are involved.
The broker facilitates these transactions in return for a commission or fee, which in most cases is not considerable. As forex markets operate online such transactions take place over trading platforms.
There are various advantages of using an online broker. First of all the execution of trades is greatly facilitated. In most cases it is easier to take advantage of the volatility of a currency pair. Besides, online trading with an online broker is both convenient as well as cost effective if you were to compare it with the way traditional brokers used to operate.
There are different types of online brokers, and prior to choosing one it is a good idea to be aware of this so as to make a well informed decision.
- Full service brokers such a broker offers a range of services such as trading and investment advice, retirement planning, tax advice and research. In such cases fees are typically higher when compared to those charged by other brokers.
- Discount brokers these brokers charge a discounted fee which is however strictly limited to assisting the trader in trading. Hence no investment advice and tax planning tips are offered.
All you need to do to get started is open an account with an online broker. It is important that prior you do this you ensure that you have researched well so as to choose a reliable broker. Bear in mind that the broker will be crucial in your life as a trader and it is therefore best to ensure that the broker is to be trusted, is licensed and reliable. When you choose a broker you will need to fill in an application form so as to open an account. To do this you will need to provide certain documents so as to confirm your identity. You will also need to select the method for funding your account.
The online broker will be charging you a fee for the services that he will be rendering you. This includes the website you will be using, the relaying of orders to the market and he will also be involved in settling such orders too subsequently. Fees may include trading fees per trade you make, and there may also be a fee for broker-assisted trades in cases when you need more assistance from the broker. Be aware that there could also be other fees such as account maintenance or inactivity fees, and withdrawal fees.
You should also consider the minimum account balance required as this varies from one broker to another. Your investment goals and trading frequency will also affect the broker you choose.
The broker facilitates these transactions in return for a commission or fee, which in most cases is not considerable. As forex markets operate online such transactions take place over trading platforms.
There are various advantages of using an online broker. First of all the execution of trades is greatly facilitated. In most cases it is easier to take advantage of the volatility of a currency pair. Besides, online trading with an online broker is both convenient as well as cost effective if you were to compare it with the way traditional brokers used to operate.
There are different types of online brokers, and prior to choosing one it is a good idea to be aware of this so as to make a well informed decision.
- Full service brokers such a broker offers a range of services such as trading and investment advice, retirement planning, tax advice and research. In such cases fees are typically higher when compared to those charged by other brokers.
- Discount brokers these brokers charge a discounted fee which is however strictly limited to assisting the trader in trading. Hence no investment advice and tax planning tips are offered.
All you need to do to get started is open an account with an online broker. It is important that prior you do this you ensure that you have researched well so as to choose a reliable broker. Bear in mind that the broker will be crucial in your life as a trader and it is therefore best to ensure that the broker is to be trusted, is licensed and reliable. When you choose a broker you will need to fill in an application form so as to open an account. To do this you will need to provide certain documents so as to confirm your identity. You will also need to select the method for funding your account.
The online broker will be charging you a fee for the services that he will be rendering you. This includes the website you will be using, the relaying of orders to the market and he will also be involved in settling such orders too subsequently. Fees may include trading fees per trade you make, and there may also be a fee for broker-assisted trades in cases when you need more assistance from the broker. Be aware that there could also be other fees such as account maintenance or inactivity fees, and withdrawal fees.
You should also consider the minimum account balance required as this varies from one broker to another. Your investment goals and trading frequency will also affect the broker you choose.