ALGO GENESIS

Brokerage Firms

Brokerage Firms are financial institutions that handles securities. Brokerage firms or brokers-in-a-brokerage firm mainly act as a middleman or intermediary that facilitates transaction between a buyer and seller.

You (Trader)

Step 01

Brokerage Firm

Step 02

Central Exchange

Step 03

One of the most important reason why professional traders always engage with a brokerage firm is for their LEVERAGE.

Here is a simple example.

Scenario#1: Say you are trading USDJPY pair with a leverage of 50:1.

If you invest an initial capital of $10,000, you will be able to conduct a transaction value up to $500,000. If the price of the currency pair moves in your favor for 100 pips, you will earn a profit of $5000.

However, if you are investing by yourself without a broker, you would have to invest $500,000 in order to earn the same amount of profit.

TRANSPARENT & QUICK

Regulated brokerage firms act as a central platform for traders to quickly connect and perform transactions. With a centralized channel, traders are able to access trading charts to monitor and analyze the activity of each pairs and how they perform. With these information, traders will be able to make decisive trading decisions.

Most importantly, by engaging with a brokerage firm you will be able to place an order at lightning speed without going to a brick and mortar currency exchange to do just that.

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