In order to begin trading in the currencies market, you need to sign up with a foreign exchange (forex) broker. The broker will accept and execute your trades, and may provide you with other services depending on the type of firm it is. Based on your needs and your level of experience, you can sign up with a full-service broker, a discount broker or a forex introducing broker.
A full-service broker will not only place your trade but also discuss trading strategies with you as well as providing you with vital information to help you make your trading decisions. A discount brokerage will only take and place your trades; you will have to make all the decisions yourself. The former type of broker is recommended for those who are new to forex trading, since they will provide much-needed guidance although they will charge higher transaction fees, while the latter may be a better choice for those with some experience under their belts, since they don't really need the additional support and can forego the extra services in exchange for lower fees.
A forex introducing broker is a happy medium between the two types of brokers described above, since they charge lower fees than full-service brokerages while providing a higher level of support than discount brokers. An IB is essentially the customer service arm for a forex trading firm. They deal with the customers while delegating the actual trading to the trading firm. Thus, they are not a middle-man since they do not hold your funds nor get involved with your trades. If you are a forex trader with a small trading account, however, using an IB has many advantages.
A well-funded IB, for example, can provide you with customer support commensurate with that of a trader with a much-larger account. To illustrate, if your trading account is only $15,000, very often your complaints will receive a low priority at a big trading firm; on the other hand, if the IB you use has funds worth around $750,000, you are now treated as a major client and you will receive due attention.
Since IBs are paid not just for every client they refer to the firm but for every trade the client makes, the brokers provide not just value-added services, often for free, but also rebates on trades. Among the services you can receive is advanced charting software or free eSignals, which you would otherwise have to pay a subscription fee to avail of. The rebates can also save you a lot of money, since forex trading by its nature involves a lot of trades.
If you are selecting a forex introducing broker, don't hesitate to do research on the candidates in your short-list. Arrange interviews with them and ask for references that you can check out before your meeting. Explain your trading objectives to the broker so that they can explain clearly how they can help you achieve them. And, never hesitate to ask questions if there is anything you don't understand before signing up with that broker. Remember that a successful long-term relationship with your broker could increase your chances for success in the forex market.
