Understanding an Introducing Broker

Trading
This is a guest post by William

Many people think that an Introducing Broker is merely a middleman and that commissions and fees will, therefore, be higher than if they were working directly with the dealing firm. However, this isn’t true because, for one, due to the high volume of customers they provide, these brokers often receive a large discount on fees and commissions. Their profit comes from this difference as they charge the standard rates a regular, discount Forex broker offers. In fact, sometimes they offer better conditions.

Customer Service and the Introducing Broker

An Introducing Broker is, in fact, the best option for a retail trader because the customer support they offer is leagues ahead of standard brokers. After all, that is what they are there for.

Thus, irrespective of your account size you will get the same attention as large volume traders, which can be invaluable, especially if you find yourself with an order that has been filled with extreme slippage. With a regular Forex broker you would have an extremely difficult time trying to solve the problem if your account balance is below $20,000.

However, since an Introducing Broker is viewed as a client of the Forex broker, you aren’t seen as an individual trader anymore but as a client with an extremely large trading account through the Introducing Broker you are using. Therefore, if you do have a problem you will have the support of the Introducing Broker which increases the chances of a favorable resolution considerably.

An Introducing Broker Offers Free Services

Since an Introducing Broker is paid for each client they bring to the dealing firm, they often offer extra services, free of charge or at competitive rates in an attempt to attract even more customers. These services range from charting software to free trading signals, which can substantially increase your profits.

Some Introducing Brokers also offer managed accounts and automated trading according to their signals. While, at first glance, this may seem like an excellent solution, you need to be wary because the Introducing Broker is paid according to the trading volume. This means that whether you win or lose the trade, the broker still makes money, as long as you trade.

An Introducing Broker Offers Customers Rebates

Another advantage to trading through an Introducing Broker is that they offer rebates on round-turn trades. This is an advantage, even if you don’t trade large lot sizes, because the Forex market, by its very nature, is one where there is a high frequency of trades. Receiving a rebate on every trade you place can quickly add up.

Choosing the Right Introducing Broker

Choosing a good Introducing Broker to work with is much like picking a regular broker. You have to make sure you do your due diligence on the Introducing Broker as well as the dealing firm they work with.

The best way for you to do this is read online reviews pertaining to the company in question. However, do keep in mind that people tend to post negative reviews more often than positive ones. Therefore, don’t worry if you find more negative reviews than good ones. In fact, you should consider asking existing clients for their opinion and how happy they are with the services of the Introducing Broker they are using.

There are many advantages to using an Introducing Broker, especially since they keep their finger on the pulse of the market and always have the latest information.

This article was written by William, a regular writer for Forex Trading Finder, a free to use Australian Forex broker comparison service. Visit Forex Trading Finder for a range of comprehensive forex guides and reviews of the best forex brokers.

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