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What Sets Expensive Brokers Apart From Cheap Brokers?

When it comes to trading on the financial market, investors use brokers, otherwise called forex brokers or currency trading brokers, who place trades for their customers. When an investor creates a trading account and makes their deposit, at that point, they use brokerages to purchase and sell money through margins. The financial markets are open…

When it comes to trading on the financial market, investors use brokers, otherwise called forex brokers or currency trading brokers, who place trades for their customers. When an investor creates a trading account and makes their deposit, at that point, they use brokerages to purchase and sell money through margins. The financial markets are open five days a week, 24 hours a everyday. The best forex agents for beginners provide three main advantages. The first and foremost is the fact that the traders have to be trusted and regulated who provide an easy and accessible online platform, they also have to offer various educational resources, like the demo account or other material to help the customers understand how the markets operate. Furthermore, they also have to offer good quality market research.

Thus, the question is tricky because there is no such thing as expensive or cheap brokers. Given that these services cost varying commissions from various brokers depending on the quality of services they provide their customers. There are just brokers with tight spreads and brokers with loose spreads. The tighter the spread the more profit a customer gets from their trade.

Expensive brokers often add commissions on top of the spread they already have, as the cost and fees for executing a trader’s orders. This is not good practice, because it means charging the customer twice for services. And they might end up losing all their investment, especially when no profitable trades are made. However, this broker, on the other hand, is the perfect middle ground between these two extremes. They are not really cheap, but that’s justified through the resources they provide their customers, nor are they expensive, as any investor can make a decent profit out of trading with them.

Financial brokerages, as their name implies, are the brokering services of customer trade. Which is referred to as trading. When dealers participate in buying and selling currencies through their financiers, there are certain expenses and charges to execute such requests, and brokers will typically add a spread or commission to their primary cost, assuming any, so as to net a benefit for their services to traders, who are their clients.

The spread is the contrast between the prices offered for an immediate sale, where an item can be sold and purchased respectively. A spread can be a fixed sum, variable sum, percentage, or both, and consists of the particular cost to trade item. At any given time, whatever the spread is, constitutes the cost that would be sustained to open and close a position in that item.

Source: Maritime Industry Foundation

How brokers make money

To comprehend what value model you should use for your forex trading and if you should use commission or spread, it is too important to understand how forex brokers earn money doing what they do. There are two ways through which a forex broker can make money, which is through spreads and commissions. Another method through which a forex agent makes money is by making profits from a trader’s losses in the market. This is very common with STP traders when they trade against their client’s positions.

An STP agent takes your exchanges and naturally passes it through to their liquidity providers and banks. The banks send back value for the instrument, and the agent includes a spread on the price, through which they make profits from the charge to their customers. With this kind of agent, an investor has the option of not paying commissions and paying a relatively higher spread, or they can pay a commission on each exchange and pay lower spreads.

Discount Brokers vs. Full-Service Brokers

The financial markets have many different types of agents and depending on how much cost a newbie investor is willing to incur, the services of each one of these brokers vary. There are full-service and discount brokers, who many people consider as cheap. The full-service broker is the traditional broker, is an intermediary that can give a more thorough service than an ordinary discount broker. The traditional brokers provide retirement, tax, and financial plans together with investment counsel to their customers. These extra administrations and highlights for the most part come at a more extreme cost. With this quality of services provided by the brokerages, comes higher prices.

For a newbie investor looking for cheap and a more active approach, the best choice would be a discount broker. This type of broker provides its customers with low rates of commission on trades and they usually operate on online platforms or through mobile applications, where the client can manage their investments. They are less expensive, however, they require the clients to educate themselves on market trends and pay close attention to the market, to avoid incurring losses. Fortunately, a majority of the discount brokers on the financial market provide educational materials to assist the client with learning how to invest and trade on the financial market.

Source: Top10stockbroker

Pros And Cons Of A Discount Broker

With the world becoming a global village with many new innovations, the financial markets are picking up on the trends as well. Technology has made trading faster and transactions even more effective paving a way for discount brokers to operate on the internet. Brokering online has become the new standard and is very popular among investors. Currently, the low-cost brokers are taking the market by storm, with the cheap services they offer, it is becoming synonymous to brokering. There is no doubt that working with brokers that provide services for affordable rates at reduced commissions is ideal and guarantees greater benefits over time. However, they do not provide their clients with any expert advice. All things considered, the services of discount agents are done mainly focused on self-interest.


  • Lower cost
  • Access to basic educational resources to help you do it yourself
  • No need to worry about biased investment recommendations


  • Less hands-on customer service
  • Possible hidden fees
  • No advice or guidance

That is why the question of whether or not a broker is cheap or expensive still depends on the quality of services they provide to their customers.

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Daily Financial News

Don’t Count On JPY Correction; Staying Long GBP/JPY

The path of the potential pace of the JPY decline may still be underestimated by markets, which continue trading the JPY long.

While the 10% USDJPY advance from September lows looks impressive from a momentum point of view, it may no thave been driven by Japan’s institutional investors reducing their hedging ratios or Japan’s household sector reestablishing carry trades.

Instead, investors seemed to have been caught on the wrong foot, concerned about a sudden decline of risk appetite or the incoming US administration being focused on trade issues and not on spending. Spending requires funding and indeed the President-elect Trump’s team appears to be focused on funding. Here are a few examples: Reducing corporate taxation may pave the way for US corporates repatriating some of their USD2.6trn accumulated foreign profits. Cutting bank regulation could increase the risk-absorbing capacity within bank balance sheets. Hence, funding conditions – including for the sovereign – might generally ease. De-regulating the oil sector would help the trade balance, slowing the anticipated increase in the US current account deficit. The US current account deficit presently runs at 2.6% of GDP, which is below worrisome levels. Should the incoming government push for early trade restrictions, reaction (including Asian sovereigns reducing their holdings) could increase US funding costs, which runs against the interest of the Trump team.

Instead of counting on risk aversion to stop the JPY depreciation, we expect nominal yield differentials and the Fed moderately hiking rates to unleash capital outflows from Japan.The yield differential argumenthas become more compelling with the BoJ turning into yield curve managers. Via this policy move, rising inflation rates push JPY real rates and yields lower, which will weaken the JPY. Exhibit 12 shows how much Japan’s labor market conditions have tightened. A minor surge in corporate profitability may now be sufficient, pushing Japan wages up and implicity real yields lower.

JPY dynamics are diametrical to last year . Last year, the JGB’s “exhausted”yield curve left the BoJ without a tool to push real yields low enough to adequately address the weakened nominal GDP outlook. JPY remained artificially high at a time when the US opted for sharply lower real yields. USDJPY had to decline, triggering JPY bullish secondround effects via JPY-based financial institutions increasing their FX hedge ratios and Japan’s retail sector cutting its carry trade exposures. Now the opposite seems to be happening. The managed JGB curve suggests rising inflation expectations are driving Japan’s real yield lower. The Fed reluctantly hiking rates may keep risk appetite supported but increase USD hedging costs.Financial institutions reducinghedge ratios and Japan’s household sector piling back into the carry trade could provide secondround JPY weakening effects

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Daily Financial News

Mexico raises interest rates, cites Trump as risk

The head of Mexico’s central bank says U.S. Republican candidate Donald Trump represents a “hurricane” sized threat to Mexico.

Banco de Mexico Gov. Agustin Carstens told the Radio Formula network Friday that a Trump presidency “would be a hurricane and a particularly intense one if he fulfills what he has been saying in his campaign.”

Trump has proposed building a wall along the border and re-negotiating the North American Free Trade Agreement.

Mexico’s central bank raised its prime lending rate by half a percent to 4.75 percent Thursday, citing “nervousness surrounding the possible consequences of the U.S. elections, whose implications for Mexico could be particularly significant.”

Mexico’s peso had lost about 6 percent in value against the dollar since mid-August. It recovered slightly after the rate hike

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Financial News

Africa’s first Fairtrade certified gold co-operative offers hope to gold miners living in poverty

Syanyonja Artisan Miners’ Alliance (SAMA) has become the first artisanal small scale mining co-operative in Africa to become Fairtrade certified, bringing much needed hope to impoverished communities who risk their lives to mine the rich gold seam that runs around Lake Victoria.

SAMA is one of nine previously informal groups from Uganda, Kenya and Tanzania which has benefitted from a pilot project launched by Fairtrade in 2013. This innovative program aims to extend the benefits of Fairtrade gold to artisanal miners across East Africa.

In that short time, SAMA has undergone training in business and entrepreneurship, as well as safe use of mercury, internal control systems, labour rights and better working conditions, health and safety and more. Previously, daily contact with toxic chemicals used to process gold meant members risked disease, premature births and even death.  Fairtrade gold was first launched in 2011, and SAMA now joins Fairtrade certified gold mines MACDESA, AURELSA and SOTRAMI in Peru.

The co-operative produces just 5 kg gold per year, but nevertheless has the potential to significantly benefit many people in the local community through better conditions through certification. It is expected that Fairtrade and organizations like Cred Jewellery will support the miners, ensuring their gold can be refined and made available to jewellers in the UK and other markets.

Gonzaga Mungai, Gold Manager at Fairtrade Africa said: “This is a truly momentous and historical achievement and the realisation of a dream that is many years in the making. Gold production is an important source of income for people in rural economies. Congratulations to SAMA, it sets a precedent which shows that if groups like this can achieve certification, then it can work for others right across the African continent.”

The Fairtrade Gold Standard encourages better practice and changes to come in line with international regulation around the production and trade of so-called ‘conflict minerals’. Under the Standard, miners are required to:

  • Uphold a human rights policy preventing war crimes, bribery, money laundering and child labour
  • Clearly represent where the minerals were mined
  • Minimise the risks of conflict minerals through robust risk assessments and collaboration across supply chains
  • Report to buyers and trading partners regarding the risks of conflict minerals

Now in its second phase, the programme will focus on supporting other mining groups in the region to access affordable loans and explore a phased approach to accessing the Fairtrade market, allowing more mining co-operatives across Africa to participate in the programme.

Gonzaga added: “Sourcing African metals from smallscale miners in the Great Lakes Region is the responsible thing to do. For a long time companies have avoided buying gold from this region, with devastating consequences for impoverished communities who were already struggling. It has driven trade deeper underground, as unscrupulous buyers pay lower prices and launder illegal gold into legitimate supply chains. That’s why we have chosen to work with these groups to help them earn more from their gold within a robust compliance system that offers social, environmental, and economic protections.”

The Fairtrade gold programme offers a small but scalable solution to sustainable sourcing of gold from the region in line with Section 1502 of the Dodd-Frank Act in the US, OECD Due Diligence Guidance and recent EU Supply-Chain Due Diligence proposals which could come into effect in 2016. This means that up to 880,000 EU firms that use tin, tungsten, tantalum and gold in manufacturing consumer products could be obliged to provide information on steps they have taken to identify and address risks in their supply chains for so-called ‘conflict minerals’.

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