What you'll learn
- Describe what a broker does for a trader
- Understand that your trade is with the broker, not the market
- See why the broker's own model and regulation matter
What the broker provides
- A trading platform, either its own or a third-party one such as MetaTrader, with prices, charts and order tickets.
- Prices: a bid and an ask for every instrument, built from the broker's liquidity feeds.
- Leverage: the broker lets you control a position far larger than your deposit, holding a fraction of it as margin.
- Custody: your money sits with the broker, which is why where and how it is held is a regulatory question.
- Settlement: the broker credits your profits and debits your losses, applies swaps, and pays withdrawals.
Your counterparty is the broker
When you buy EUR/USD on a retail platform, you are not buying euros from another trader. You are entering a contract with your broker. The broker may hedge that contract with a liquidity provider or may keep the risk itself, and the next lessons explain both. Either way, if the broker fails, your open positions and your balance depend on how it was regulated and how your money was held. That is why the regulation module is the heart of this course.
What a broker is not
A broker is not an adviser and does not owe you a profitable trade. It is not obliged to give you the best price in the world, only a fair one under its regulator's rules. And it is not a bank: a deposit with a broker is not covered by ordinary deposit insurance, although some regulators run compensation schemes that partly fill the gap.
Key takeaways
- A broker provides the platform, prices, leverage, custody and settlement a retail trader needs.
- Every retail trade is a contract with the broker, which makes the broker's solvency and regulation your concern.
- A broker is neither an adviser nor a bank.
Knowledge check
Trading forex, CFDs and other leveraged products carries a high risk of losing money. This lesson is general education, not advice. Risk disclosure.