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In the forex space, a broker is any company that can provide traders with access to a platform that permits the buying and selling of multiple currencies.
The retail forex industry has grown over the past two decades to include every major jurisdiction, which in turn has necessitated new regulatory oversight.
Relative to the institutional sector, retail brokers are rather small portion of the greater forex market. However, traders can rely on brokers for leveraged trading in a 24-hour-a-day market.
What Differentiates Forex Brokers?
Forex brokers vary across the board in terms of trading platforms, currency pairs supported, leverage, and spreads, among other attributes.
The most commonly supported trading platforms used by forex brokers include MetaTrader 4 (MT4) and MT5.
Many forex brokers also offer contracts-for-difference (CFDs) and exposure to commodities such as precious metals.
Another element that has seen a high degree of improvement in recent years is education and customer service gains.
This has taken the shape of online portals designed to promote proper forex trading techniques.
Webinars, encyclopedias, trading tools, and other techniques have helped educate retail traders, many of which lose money trading forex historically.
Forex brokers are located around the world but are bound by their service offerings in many instances.
In most jurisdictions, these entities require licenses from regulatory authorities to trade forex.
Over the past few years, retail brokers have dealt with a wide range of challenges that has redefined the playing field.
This includes new regulation, leverage restrictions, compliance costs, payment processing challenges, and more.
Brokers have consistently had to deal with an increasingly competitive environment for clients as well.