There are many choices of Forex Brokers available. It may seem like it would be hard to choose one, but the choices will become easier if it is narrowed down a little bit. The first thing a trader should do when choosing a broker is to determine what type of broker will meet the Forex trading needs. These are some of the types of brokers that can do Forex trades:
Retail Market Forex Brokers
A majority of Forex brokers will fall into this category of broker and is the most safe to use, especially when starting out as a Forex trader and are legal in most countries. They have direct connections or intermediate connections to the Forex market.
Institutional Market Maker
For a broker with a direct connection to the Interbank market, this is the best type of Forex broker and is a good choice for new traders that have a large amount of money available to bet in trading.
Bucket Shop Forex Brokers
These brokers bet against retail brokers and have no access to the Forex market. Some circles question the legitimacy of these brokers. These brokers benefit when the trader looses and most traders avoid this type of Forex broker, especially new traders because they often strip money from a smaller trader.
Book Maker Forex Brokers
This is the type of broker that makes money from the difference between the profit and loss, so there are some similarities to the bucket shop brokers, but the book maker doesn’t profit from loss. The broker doesn’t have access to foreign currency and book makers are not legal in some countries.
Institution Forex Brokers
These brokers only do trades for banks so individuals will not have access to their services. They are directly connected to the Forex market.
It is wise to take time choosing a broker from the many Forex brokers that are out there.