The Evolving Role of Forex Brokers in the Rise of Retail Traders

The forex market has rapidly evolved over the past few years due to the active participation of a new breed of investors commonly known as ‘retail investors’. The market was initially dominated by the big players like banks, hedge funds, but now the trend has shifted and trading takes place from home. This has led to the evolution of the forex brokers whose services have to suit the standards of this ever expanding category.

Small investors have been definitely instrumental in the growth of the forex market by logically escalating the need for access and convenience. To this, the forex brokers have been developing easier interfaces to make the platform accessible for the novices and complex ones for the professional traders. Overview, orientation, and training have become criteria that are mandatory for any software. A broker is no longer simply a person that simply takes your order and executes it, they are guides who assist people in the often confusing market.

Trading

Image Source: Pixabay

As a result of this, technology has been found to play a central role in the manner in which financial reporting has evolved. Introduction of advanced trading platforms has put forex at your fingertips as long as you have an internet connected device. Brokers should expand their trading platform by using aspects such as artificial intelligence analysis, real time market data and charting with customizable tools. These features enable ordinary investors in retail brokerage to make sound decisions without a wealth of knowledge or experience.

This growth has also influenced brokers to reconsider their fee model since the emergence of retail trading. In this regard, most of the brokers have gone to the extent of removing commissions, charges and low spreads to attract price sensitive persons. It has also led to a surge in competition between brokers, mainly because of this change, and can only mean one thing – evolution. So for the retail trader it means they get better price execution and much cheaper routes and tools that were all but exclusive to the institutional trader.

Social trading is one more trend that influences the activity of a forex broker. Large numbers of retail traders try to learn from others, especially from those who are considered to have more knowledge and experience on the matter. Today’s brokers are developing spaces where people can interact and information exchange can occur like strategy sharing, discussion of trends, and replication of trades. In other ways, brokers are making retail traders feel that they are in a community and increasing their confidence in trading.

Risk management is one of the areas where brokers are extending the helping hand to the retail traders. This is especially because several new entrants into the trading market lack sufficient knowledge about the risks associated with the activity. To this end, brokers have generated features that enable traders to have control over their risk exposure including the negative balance protection, the margin calculator and the automated stop loss order. All these features not only safeguard traders but also show the brokers’ concern of environmental friendly and responsible trading.

Regulation has also been influential in defining the roles that brokers undertake in the marketplace. Together with the growing popularity of retail trading, authorities are turning their attention to transactions’ transparency and clients’ safety. A forex broker needs to provide additional information on price, execution of orders and risks involved. These rules and regulations are important to make sure that brokers adhere to standard bearing in mind that brokers’ markets are normally competitive.

Hence the retail traders’ participation has brought a positive change and an opportunity within the forex market. Brokers have advanced from being mere middlemen; they have become today’s trading companions. Through the implementation of innovation, education and transparency, brokers are allowing a young generation of traders to confidently engage themselves within the forex trading market.

Post Tags
Rahish

About Author
Rahish is Tech blogger. He contributes to the Blogging, Gadgets, Social Media and Tech News section on TechOTrack.

Comments