Course 2 Beginner

Forex Brokers

What a broker does, how it makes money, what regulation protects, and how to choose and check one before you deposit.

0 of 19 lessons

Module 1: What a broker is

1
What Is a Forex Broker?
A forex broker is a company that gives retail traders access to the currency market. It quotes you prices drawn from its liquidity providers, accepts your...
2
How Orders Are Executed
When you click buy, your platform sends an order to the broker's server, which checks your margin, matches the order against its price and either fills it...
3
How Brokers Make Money
Brokers earn from the spread, from commissions, from the overnight financing they charge on leveraged positions, and, at brokers that keep client risk on their...
4
Spreads, Commissions and Financing
The total cost of a forex trade is the spread you cross when you enter and exit, any commission the account charges, and the financing you pay for each night...

5
Market Makers
A market maker is a broker that quotes its own bid and ask prices and takes the other side of client trades from its own book. It profits from the spread and...
6
STP and ECN Brokers
STP, straight-through processing, means the broker passes client orders directly to its liquidity providers rather than taking the other side. ECN, electronic...
7
A-Book and B-Book
A-book means the broker hedges a client's trade in the market, so its profit is the spread or commission and nothing else. B-book means the broker keeps the...
8
Hybrid Models and Liquidity Providers
A hybrid broker combines market making with straight-through processing, deciding trade by trade or client by client which to hedge. A liquidity provider is...

9
What Regulation Means
A regulated broker holds a licence from a financial authority that sets rules on how it handles client money, executes trades, markets its products and reports...
10
Legal Entities and Licences
A broker brand is usually a group of separate companies, each licensed in a different country and each serving clients from different regions. When you open an...
11
Client Money Segregation
Segregation means the broker holds client deposits in bank accounts separate from its own operating money, held on trust for clients. If the broker becomes...
12
Negative Balance Protection
Negative balance protection means that if a sudden market move pushes your account below zero, the broker absorbs the shortfall and resets your balance to zero...
13
Compensation Schemes
A compensation scheme pays clients of a failed financial firm up to a fixed limit when the firm cannot return their money. The UK's Financial Services...
14
Offshore Regulation
Offshore regulation means a licence from a small jurisdiction such as the Seychelles, Mauritius, Vanuatu, Belize, St Vincent or the British Virgin Islands....

15
How to Choose a Forex Broker
Choose a forex broker by shortlisting on regulation first, then comparing trading costs, platforms, markets, account types, minimum deposit, execution, funding...
16
Comparing Trading Costs and Platforms
Compare trading costs by working out the round-trip cost per lot, spread plus commission, on the pairs you trade during the hours you trade, and adding the...
17
Account Types and Minimum Deposits
Most brokers offer a standard account with a wider spread and no commission, a raw or ECN account with a near-zero spread and a commission, and often a...

18
Checking a Broker Before You Deposit
Checking a broker means finding the legal entity you would contract with, looking that entity up on its regulator's own register, confirming the name, number...
19
Warning Signs and Broker Scams
The common broker scams are the unlicensed broker that takes deposits and refuses withdrawals, the clone of a real firm, the account manager who trades your...

Every lesson's knowledge check plus a few extra questions, scored with feedback. Then continue to Course 3: Prop Trading.