Tricks of the Trade: Secrets of Forex Brokers

Every magician has his secret tricks of the trade. Naturally no magician would reveal their magic tricks for they would not earn any money with them anymore. The tricks of the trade enable any professional of any profession to have an edge over the client when it comes to knowledge, timing, and income. Such tricks of the trade also exist when it comes to Forex brokers. No matter if you want to be a Forex broker or if you are a concerned client, we will take you behind the tricks of the trade of Forex brokers.

Forex brokers are mediators on the market for the clients. They are the ones who advice their clients to buy or sell and they are also responsible for the actual buying and selling transaction. The Forex broker has many contacts on the market and can determine if a currency will rise or fall and subsequently will trade with the chosen currency.

Every Forex broker is also knowledgeable about the background of the currency. This means that every broker does a Forex market research on the probability of rise and fall depending on the following factors; political situation, economical situation, market demand and market trend. From this information, the Forex broker can determine precisely what may happen to the currency on the Forex.

Another trick of the trade of Forex brokers is that they use their knowledge to an advantage against the client. This does not mean that the broker wants to scam the client, but it simply means that the Forex broker has a market advantage because of the knowledge. This makes the Forex broker more powerful over the client, and the Forex broker can influence the client's decision positively or negatively and most of the time to the broker's advantage.

Brokers in general only get a small commission rate from the clients Forex market transactions. The commission depends on how much the client gains through the Forex trade. Depending on agreement and agency, the Forex broker can strike a deal of 5 percent to 20 percent commission.

The trick of the trade here is that the client is made to think that the Forex broker will try to earn the client as much as possible from the Forex market. This is only partly true. Let us take an example of a 10 percent commission; the broker got you $1000 from the buying and selling of currencies, then his share would be $100. Let us assume the broker waits a little longer and earns $1200 instead, so his share will be $120. A Forex broker would definitely not waste more of his time to get a measly $20 in addition. This means the Forex broker will take the first deal and will convince the client to do so as well.