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Forex Dealer and Independent Broker Dealer: Definition and Importance


Definition

What is a Forex Broker Dealer? It is your conduit between you and the other banks. The dealer helps you by opening an account, choosing the type of broker you want, giving you various options on your spread and leverage. A forex dealer does not take a commission directly from you. Instead he takes a fraction of your pip. For example if you pip an exchange by 0.3, your dealer would probably take a pip of 0.1 from your transaction.

Independent Broker Dealer is a company that execute the trades and orders on behalf of their customer. He has to register himself in SEC (Securities and Exchange Commission), because they are known for selling and buying securities for themselves and their customers. When a person executes orders for them self is called "Dealer", whereas if a person executes trades for their customer is called "Broker".

Regulation

When forex initially entered, the segment was very murky. People were getting downright ripped and cheated. Since the amount of money that passes through forex was in the trillions, a curb was required to monitor the various shady dealers and dealings. In the United States, the regulatory body for forex is the National Futures Association. The NFA as it is otherwise called is responsible for the overlook and authorization of various firms involved in the forex dealings. They have strict screening procedures prior to approval of the firm. Once the firm has been approved for forex dealings, they are subject to stringent regulations.

Importance

It's highly required that you do your forex dealings only through an authorised forex dealer. There are different reasons for this but the most important rationale to only deal through an authorized dealer is, it ensures tat your hard earned money is in safe hands. Not only it guarantees that your investments are secure, but also makes certain that the spread pips and leverage are all of standard market values and in case something goes wrong there is always an overlooking regulatory authority to help you out.

The first thing which comes to one's mind while investing money in Forex market is to get highest returns from least investment with minimum losses, and this can only be achieved through an expertise in the market. Now, if you are dealing through a certified Forex dealer, you can expect maximum output. He is the one who has proficiency in dealings and ability to predict the rise and fall in the market. He can guide you when, where and how much to invest to get best results.

One more reason of people investing in Forex market is they want to expand their business around the globe and this can be done by networking. An authorized dealer is a person who can get you acquainted with trustworthy and beneficial persons from industry of your choice, with who you can deal in order to develop your company. So, if you really want to take advantage of investing in a Forex market, an authorized Forex dealer is what you must have.