Brokers are the traders direct link to the market. They bridge the gap between the market and traders across the globe. Equally brokers execute the traders orders directly at the market and bring him back his profits or loss from positions taken over a given period of time. However, traders must be very cautious in choosing a broker as some broker often make it difficult for traders to withdraw after depositing with them. Wikifx SA therefore has been established to help South Africans identify good brokers to invest with.
Meaning of Brokers:
A forex broker is a financial services industry that gives traders direct access to the exchange market for the purpose of buying and selling of foreign currencies, including commodities and indices. Above all, a forex broker may also known be as a retail forex broker or a currency trading broker that makes it possible for a trader to place his orders on any choice currency pair provided by the broker especially from the comfort of his/her home or office.
Types of Brokers
There are basically three types of Brokers known as:
A. Dealing Desk brokers (DDB)/Market Makers.
B. No Dealing Desk Brokers (NDDB)
C. Electronic Communications Network (ECN) brokers
Explanations:
DDB- Dealing Desk Brokers: A dealing desk broker is also known as a market maker. Market makers typically offer fixed spreads and may elect to quote above or below actual market prices at any time. Market makers are always the counterparty of the trader, who doesn't trade directly with the liquidity providers. Generally speaking, the Market makers brokers get paid through the spreads, and they often enter the opposite trades of their clients backed by their liquidity providers. They benefit therefore from the clients lost positions whose opposite they have taken and vice versa.
NDD – No Dealing Desk: An NDD forex broker provides direct access to the exchange market. This type of forex broker as the name implies, lacks a dealing desk, as the name implies. Nevertheless, it instead offers the best composite quotes obtained from the multiple forex quote providers that give the NDD broker its liquidity in the forex market. With this type of brokers there is no requoting of prices, which means that you can trade during economic announcements without any restrictions. Equally their spreads provided are lower, though they are not fixed, so they can increase significantly when volatility is increasing during major economic announcements.
ELECTRONIC COMMUNICATIONS NETWORK (ECN) BROKERS
An Electronic Communications Network or ECN forex broker generally does not have its own dealing desk. Instead, the broker provides an electronic trading platform in which professional market-makers at banks, as well as traders and other forex market participants can enter bids and offers through their system.T This type of broker helps to guide the anonymity of traders. In this case, traders who do not wish to give away the fact that they are on the bid or offer can easily do so through the ECN brokers.
How to identify Authentic brokers through Wikifx.
For new traders in South Africa, downloading Wikifx helps them identify genuine brokers to trade with. This is because Wikifx always carries out thorough investigation about each brokers and posts their results and information on the Wikifx platform for all South African traders to view and make wise decisions. All the trader needs to do is to visit the Icon marked “Ranking” on the website/app and there one will immediately find the list of Wikifx approved brokers with their ranks too. Find below the six high ranking brokers recommended by Wikifx for traders.
Some list of brokers highly rated by Wikifx.