Meet The Forex Dealers
A Forex dealer can be defined by the following description: A forex dealer is a firm or individual that makes a living from buying foreign exchange currency from one party and then sells it to another. Forex dealers receive the difference between the buying prices and the selling prices. This difference is also called the “spread”. Spreads are measured in “pips”.
foreign exchange dealers can also be defined as any financial body or institution that has been given authorization from the Forex regulatory body to act as foreign currency exchange dealer, dealing with the trade of foreign currencies. Each country will have its own Forex regulatory body to ensure that all Forex trading are above board and just.
In the USA, this regulatory body is known as the National Futures Association (NFA).The NFA regulates the American Forex FX trading dealers market by submitting Forex traders to strict screening conditions when registering as Forex traders and enforcing Forex regulations when traders are approved. The Foreign currency market is safeguarded against illegal activities, such as fraud, by enforcing strict regulations upon Forex traders.
The NFA was established in 1982 and has since inception been responsible for all regulatory and auditing duties of currency exchange dealers companies involved in Forex dealings on behalf of the general public. Membership to the NFA is compulsory and it is illegal for any authorized Forex dealer to interact in business with a non-NFA member.
The annual fees for being a Forex dealer on the Forex trade market can be very expensive. Various fees must be paid yearly in order to become an authorized Forex dealer.
A number of penalties are also put in place, for those currency exchange dealers that do not pay their annual Forex fees on time.
A Forex brokers are mostly agents who trades in foreign exchange currency on behalf of their clients, whereas a dealer trades as a principal and trades in foreign exchange currency for his own account.
Foreign exchange dealers differ from foreign exchange brokers in that Forex dealers act as a principal in a transaction. A Forex dealer takes responsibility of assets and is exposed to inventory risks. A foreign exchange broker only negotiates and facilitates a trade on behalf of a client. Larger brokerages will trade as both brokers and principals and therefore they are sometimes referred to as broker-dealers.
Foreign exchange dealers will deal with their clients in different ways, but they are all bound by the same higher Forex regulatory body. Foreign exchange dealers should therefore be able to provide you with their financial policies in writing. When deciding on a Forex dealer it is important to look at his or her experience, and fees. It is important to do proper research when deciding on a currency exchange dealer. Remember that finding currency exchange dealers with an excellent spread policy can result in bigger payoffs and that there are many currency exchange dealers to choose from.