Want to participate in online forex trading? Choosing the right online trading brokerage is part of the basis for starting to operate. Reliability, seriousness, and efficiency are the basic parameters for the right choice…
The forex broker is a financial intermediary that offers a securities trading service on behalf of third parties and is essential for operating on forex. However, our advice is to choose a regulated broker. Always be wary of brokers who contact you by telephone, with a foreign accent, and who “invite” you to open a risk-free account, with a few dollars, and with an expert consultant ready to follow you in your operations by providing advice on how to earn!!! Serious brokers do not make telephone acquisition policies, they do not open accounts to deposit a few dollars, and above all, they do not sell operational signals that will make you become millionaires in a few months.
The broker has the task of transmitting to the market the purchase or sale offers sent to him by his clients: in practice the intermediary simply “inserts” the investors’ proposals into the market.
The serious broker therefore does not take an active part in the transaction, nor does he propose his offers to the market: his profit is therefore generated only by the commissions (fees or pips) that he requests for each successful operation; commissions can be fixed (a certain amount per operation) or percentage-based (a percentage of the value of the operation).
The choice of the broker and online forex trading platform is fundamental for the correct management of the trader’s investment: the commission cost of each individual operation or the spread applied, the fixed cost of the platform (often, almost always free) and the reliability of the same is fundamental for the success of the aspiring financial operator.
The financial intermediary is a specialized operator who operates on the financial markets. The financial market, in turn, is the set of financial exchanges that are carried out through the trading of financial instruments.
It should be noted that in the financial market, the majority of trades take place thanks to the work of financial intermediaries. In reality, financial exchanges within the market can take place through three organizational types:
– Direct and autonomous exchange: givers and takers of financial resources exchange between themselves, directly, without resorting to any intermediary;
– Direct and assisted exchange: the supply and demand actors are direct counterparties, but they do not negotiate independently because they are assisted by an intermediary. In this context, the intermediary fundamentally plays a role in searching and selecting the counterparty;
– Indirect or intermediated exchange: the actors of supply and demand do not exchange directly but through the intervention of one or more intermediaries who take on the role of “intermediate exchanger”.
It should be noted that the category of direct and assisted exchange is characterized by a notable variability in the degree of intensity of the financial intermediary’s intervention. This, in fact, depends on the extent of the delegation or mandate that the intermediary receives from the client.
The indirect exchange activity is also called credit intermediation due to the role of the debtor/creditor that the intermediary has towards the counterparties. In fact, the financial intermediary takes on the role of debtor towards the giver of financial resources and the role of creditor towards the final recipient of resources.
If, hypothetically, the market were perfectly competitive, if the primary traders were rational and all had the same information (absence of information asymmetry), if trades were not conditioned by uncertainty and there were no transaction costs, then there would be no reasons for the existence of financial intermediaries.
Generally, the exchange of financial resources occurs through the work of the financial intermediary, who, as previously mentioned, takes resources from “surplus” subjects (who have a surplus of financial resources) and gives them to “deficit” subjects ” (who have a deficit of financial resources and need them to continue their productive activity).
The main elements of these exchanges are time and uncertainty. In fact, the giver of funds makes an immediate performance in exchange for a future performance, deferred compared to the current moment, which consists of the repayment of the capital received and the payment of the agreed remuneration.
In addition to the time element, the other parameter that characterizes financial exchanges is uncertainty. In particular, the uncertainty is not always “external” to the contract (the reliability of the counterparty to the contract) but can also be “internal”, in the case in which the contract includes clauses that make the borrower’s performance variable (for example, indexed contracts).
Therefore, information plays a fundamental role in the formation of decisions relating to financial exchanges.
