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A broker is an intermediary between a seller and a buyer. You can find a multitude of brokers, also called brokers .

This article is intended for the definition of the broker in finance. So if you're wondering "What is a trading broker?", you've come to the right place.

You will discover what a broker is as an intermediation company, how the broker is remunerated and you will know the different points to take into account when you have to choose your stock broker.

They can be in the field of insurance, in the field of finance, in the field of car rental or sale, in the field of real estate, and many others

FOREX BROKERS
The broker is the large format, modern and institutionalized version of the traditional stockbroker . This is a company that provides access to the financial markets to its customers, an intermediary that offers the passage of buy and sell orders on the financial markets via an account hosted by it.

The Forex broker offers its private and professional customers investment in the foreign exchange market . The development of the Internet has encouraged the rise of online platforms for placing orders, but it is still possible to place orders by telephone.

The Forex broker is therefore an online broker that allows you to place orders on currencies.

Definition of broker

The broker, whose translation into French is broker, is a company specializing in access to financial markets. The broker acts as an intermediary between his client and the financial markets.

The primary role of the broker is to execute

The broker's client, who can be a trader or an investor, will place an order to buy or sell a financial asset on his broker's platform.

The latter will execute his client's order on the financial markets.

A broker must have a regulatory license to practice his trade. Thus, the authorized broker will transmit the orders of traders on the financial markets to execute the order of his client.

The broker as an intermediary company

Brokers, as companies, add value because they can provide market research and market data.

Brokers can represent either the seller or the buyer, but rarely both at the same time.

For an investor or a trader, it is almost impossible not to use a broker to place an order on the stock market, whether buying or selling.

Thus, not all brokers offer the same solutions. Some will focus on a very specific asset, such as stocks or bonds (such as a traditional bank offers to its customers).

Others will be much more diversified and will be able to offer their customers a richer and more diversified offer.

A broker can be a broker in stocks, futures, Forex, Options or even investment funds.

Finally, brokers can be called “ dealing desk ” or “ non-dealing desk ”.

The dealing desks will create their markets and are generally large financial institutions. Indeed, the dealing desk broker has its own exchange office.

It is said that he makes the market (market maker) because he is automatically the counterparty in each transaction of his client.

When his client loses money, the broker will win and when his client wins money, the dealing desk broker will lose. He will thus want to protect himself. The downside is that there may be conflicts of interest.

The advantage of the dealing desk broker is that it has no middleman. Thus, the trader will have no latency between the passage of his order and its execution.

Conversely, non-dealing desk brokers will transmit their client's order directly to the interbank market.

He will thus buy or sell the currency pair in real time according to the order placed by his client, through one or more partner banks.

It is a more transparent solution and the broker will receive his remuneration through the spread or entry-exit commission.

The disadvantage of non-dealing desk brokers is that it is an intermediate market, which can sometimes cause slippage, your order is executed at a different price from the expected price due to high volatility.

Online brokers

Online brokers allow traders and investors to place orders on dematerialized financial markets. The customer must have an Internet connection.

Online brokers will offer the most competitive commissions for trading activity in the financial markets.

Generally, their lower costs are due to a less complex type of service that does not include advice, research services or order planning.

This broker is an executor, it executes your orders. You are in charge of managing your portfolio, deciding on which instruments you invest, for how long, which strategy you apply, etc.

This is why online brokers provide direct access platforms with charting and routing capabilities and with access to electronic communication networks (ECNs), market makers, specialists and multiple exchanges.

Online brokers are not in the business of giving advice on which assets to trade. It is up to the trader to do his own research.

The main advantages of online brokers are the speed of order execution and simplified access to an online trading platform, often allowing point-and-click executions. Complex orders on stocks and options can be placed on these platforms.