This article is about the different types of Singapore forex brokers that are available.
There are several different types of forex dealers who can range from legitimate reputable large brokerage firms to those who are operating illegal back street deals. It will be necessary for you to be very careful when you select a forex broker. The brokers all have similar basic access to the forex market, but their policies, support systems and procedures differ greatly from one to the next.
If you are a beginner in the market, you should be very careful when choosing your forex broker. This market is not as heavily regulated as other financial markets, hence you will come across many unscrupulous people who are trying to take your money.
Institutional Foreign Exchange
Institutional Singapore forex brokers are linked directly to the forex market. It comprises of around 200 banks that are responsible for at least half of all the forex transactions that occur. Since only banks are allowed into this consortium, individual traders do not have access to them. If your forex broker claims that it has direct access to the interbank market, it is acting fraudulently as only banks have this sort of access level to the market.
Institutional Market Maker
Brokers that fall into this category have a very close link to the market. Their link is more direct than most of the normal retail market makers. This type of forex brokers is ideal for a beginner in the trading market. The one problem with gaining access to them is that they normally request large initial investment amounts to allow this sort of access to the interbank market.
Singapore Forex Brokers or Retail Market Makers
Most of the online forex dealers make use of this type of forex broker for representation. They normally offer a wide choice of services and this is part of the reason why most traders use them. Their services and approach to the market vary considerably. Some of these forex brokers are connected directly or they make use of a middle man for access to the forex market. Beginners in the market can quite easily make use of this type of forex broker, but you should ensure that they offer exactly what you need to make your trading career simpler.
Bookmakers can be viewed as bucket shops. Bookmakers do not earn anything on winning a ‘bet’, but normally makes a profit on the spread. The spread is the variance between the buying and selling price of the currency. These sorts of brokers normally have no links to the foreign exchange market at all. In most global countries most of them are considered to be acting illegally.
This broker generally has no link at all to the real foreign exchange market. Bucket shops are normally involved in options or futures in the currency world. They accept the position opposite to the position taken by a retail trader. The problem here is that the bucket shop normally bets against the trader. If you are a forex trader, you should avoid these brokers at all costs.
When the time comes for you to select a forex broker, you should ensure that you do your homework and do thorough research.