Category: 1. Forex Brokers 101

What is a A-Book broker? While your forex broker will always be your counterparty and take the opposite side of your trade, it does NOT mean it has to be stuck with the potential scenario of ending up on the losing end of the trade and incurring a loss. If the broker does not want to “B-Book”… Continue reading A-Book: How Forex Brokers Manage Their Risk

When the retail forex broker takes the opposite of a customer’s trade, it can choose to ACCEPT the market risk or TRANSFER it to another market participant. If a broker chooses to accept the market risk, when the trade is executed, it is called “B-Book execution”. “B-Book execution” is just a fancy phrase for taking the opposite… Continue reading B-Book: How Forex Brokers Manage Their Risk

A lot of retail traders have no idea of how an order is processed or how forex brokers or CFD providers really operate. This lesson is intended as an introduction to the mechanics behind retail forex trading. It is aimed at forex traders wishing to gain a practical understanding of how forex brokers manage their… Continue reading How Forex Brokers Manage Their Risk and Make Money

When trading forex, where are you actually trading? In the previous lesson, you learned that retail forex traders do NOT trade in the “real” FX market. If that’s the case, then WHERE are you actually trading? When you click “Buy” or “Sell” on your forex broker’s trading platform, where do your orders go? ? That’s what we’ll reveal… Continue reading Where Are Retail Forex Traders Actually Trading?

What is a CFD? CFD stands for “Contract For Difference”.? A CFD is a tradable financial instrument that mirrors the movements of the asset underlying it. A contract for difference (CFD) is an agreement between a “buyer” and a “seller” to exchange the difference between the current price of an underlying asset and its price when the contract… Continue reading Trading Forex with CFDs

As a retail forex trader, what are you actually trading? New forex traders might be puzzled about how it’s possible to trade currencies they don’t physically own. They’re also often confused about how it’s possible to sell something before buying it. Let’s revisit a part of the earlier story about Batman and Spider-Man: Oh really? Let’s make a bet… Continue reading What Are You Actually Trading In Forex?

Is the forex broker licensed and regulated? Is the company licensed, regulated, and authorized to operate as a forex broker where you live? Notice the extra emphasis on “where you live”? It’s not enough to verify a broker’s regulatory status, you need to know which regulatory agency it is registered with and whether the jurisdiction that the… Continue reading Is the Forex Broker Licensed and Regulated?

Who are you trading with? Is the forex broker a legitimate company? Can you trust it? Unlike Batman in the story from the previous lesson, you’re not going to know who you are trading with. And even if you did, that doesn’t mean you should blindly trust them. Do not trust Spider-Man. He stole my money.… Continue reading Is the Forex Broker a Legit Company?

Using a story, let’s learn how forex brokers work…. Once upon a time, two frenemies, Batman and Spider-Man, were hanging out. They were lounging on the couch watching a movie, Justice League (Snyder’s Cut), but after a couple of hours, their attention span started to drift. Even Batman began to get annoyed at watching himself… Continue reading How Do Forex Brokers Work?

Choosing a forex broker will be the first crucial decision you’ll make as a new trader. This is why you should always perform due diligence (“do yo DD”) and DYOR. Dealing desk forex broker? Non-dealing desk forex broker? Market maker forex broker? If you’ve started doing any of your own research on which forex broker to use,… Continue reading How to Choose a Forex Broker