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What is a broker & what does it do?


The term "broker" is used in various spheres, such as in real estate, insurance, mortgage, etc. However, we mostly hear this word when talking about finances and trading on the financial markets. One needs a broker when they want to trade in the market or invest in stocks because a person cannot go to a security exchange without an intermediary. Therefore, transactions can only be concluded by legal entities that have a license — banks, investment and brokerage companies.

What is a broker?

A broker is an independent organization or a person that manages financial transactions on behalf of another party. It is an intermediary between a client and a service producer, to make it simple. Nowadays, all brokers can be divided into different types by multiple parameters. This article explains brokerage companies regarding:

In spite of the difference in work of the different kinds of brokers, they all have some similarities, like a fee for their service and online platforms for clients to perform their trades.

What is a full-service broker?

Some decades ago, a broker was a personal advisor who would share his opinion about what to buy and sell according to the situation on the market. So, people are fully dependent on this type of companies. Nowadays, they are called full-service brokers.

So, full-service brokers, or financial advisors, have a large team of financial analysts who monitor the markets and supply their clients with recommendations. Besides, they have banking divisions to provide some clients access to special financial products, such as limited partnerships, various exotic and alternative investment opportunities.

Thus, full-service brokerage firms offer their clients a full range of services. That is why their fee is higher than other brokers’ fees.

What is a discount broker?

Unlike a full-service broker, discount brokers operate for more independent clients, who do their own market research and take full responsibility for their financial planning. By allowing customers to manage their own trades, discount firms take lower or no commissions at all.

Other perks of discount brokers that attract many people, especially beginners, are minimum deposits, free learning tools, and more. Besides, the Internet has made investments and learning about it more accessible and more manageable.

The 21st century with its unbelievable leap of technology, has boosted online trading and investment. Nowadays, it is very common for brokerage companies to have at least one online platform allowing people to execute their trades.

What is a forex broker?

A forex broker is a company that provides 24-hour access to the Foreign exchange market, one of the largest financial markets operating currency pairs. Forex organizations find the best available prices in the security exchange and execute clients’ buy and sell orders. Of course, such companies do not work for free.

So, a forex broker provides financial services by giving clients access to a trading platform to execute trades, such as buying and selling foreign currencies.

Generally, trading with a forex brokerage firm includes:

What is a stock broker?

Stocks are traded on stock markets, which are like supermarkets, where companies list their stocks, and brokers help people buy and sell them with online platforms. So, a stock, or investment broker, is a financial company whose clients buy and sell stocks in a brokerage account. Unlike forex brokerage firms, stock brokers work fixed hours. They also take fees for their services.

How to choose a broker?

Nowadays, there is a wide range of financial companies alluring new clients with big profits and financial success. However, you should be very careful considering which brokers’ services to use. Here are some very important things every person should pay attention to when choosing a brokerage company.

What type of broker is FBS?

FBS is an international online broker trading in the Forex exchange market. The company was founded in 2009 and currently has over 23 million active traders across more than 150 countries, from Malaysia and Indonesia to the United Kingdom.

Licence

In the beginning, FBS had an office only in Belize. Lately, the company got the licence from a Cyprus regulator and is now located there as well. Thus, FBS is regulated by several regulators:

Reputation

The clients rate the companies’ services highly, and all their reviews are free to access on different websites, which rate brokers. Besides, FBS was granted over 60 awards. Last year, 2021, brought the company and its products several prestigious awards:

Fees and costs

FBS takes no commission, which is attractive to clients. There are no extra fees and costs, except spread, which is low and starts with one pip. That means you will pay the difference between the purchase and sell price. No inactivity or withdrawal fee is applicable. A minimum deposit of $1 is also very alluring to people.

Assets

FBS provides its clients with a wide range of trading instruments. The official website indicates 28 regular financial pairs and 15 Forex Exotic assets. Even though FBS is a Forex broker, it offers lots of other trading instruments, like metals, energies, and indices.

Education

FBS analysts constantly prepare tutorials explaining Forex trading to newcomers and expanding the expertise of seasoned traders. Thus, on the website, a client can find several educational sections, like Glossary, Forex Guidebook, Video Lessons, Courses and so on. The company also has a YouTube channel where the analysts give the latest events that may shake the market and analyze how to turn this information into a trading strategy.

Demo accounts

To be able to apply the gained knowledge from educational sections, FBS offers three Demo accounts — a Demo Standard account, a Demo Cent account and a Demo Crypto account. This is a real catch for newbies to learn without risk and deposit and for pro traders to test new strategies.

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