An Introducing Broker will introduce clients to a firm that can make trades on their behalf but will not take part in any trading themselves. The client will have to pay a fee to the introducing broker for their services but it is generally accepted that they are able to provide a better service to these clients than if they dealt with a trading company directly.
What is the role of an introducing broker?
An introducing broker will advise its clients about which trades they should make but the trades will actually be carried out by a clearing firm that the introducing broker is affiliated with. The introducing broker can be an individual or a company and they will usually act as an intermediary between their client and the clearing firm.
The introducing broker will have an arrangement with the clearing firm regarding how the fees and commissions that are paid by the client are shared between the broker and the clearing firm. The client will only have to pay one set of fees though, usually to the broker.
Many firms now will only work with introducing brokers that are registered and this will help to give clients peace of mind about the integrity and professionalism of the broker. A good introducing broker will be happy to show potential clients proof of their qualifications and will also be able to provide references from other clients. A client will probably want to consider several brokers before they decide on one that they feel they can work with.
What are the benefits of using an introducing broker?
Clients dealing directly with companies that are involved in trading may sometimes find that it is difficult to resolve any problems that occur. This may become even more difficult if the client has a relatively low amount of money invested in the company. Using Alpha Capital Markets Forex Introducing Broker service or another service of this type can help the client to eliminate some of these problems. If the introducing broker has a number of clients with the same company then they will have more standing because the total amount of money that is invested across all of their clients may add up to a substantial amount of money. Therefore the introducing broker would be more likely to be able to get any issue that the client has resolved quickly.
The introducing broker may also be able to offer their clients other services free of charge that they would normally have to pay for. This will usually be in the form of some software that can help the client make decisions about the types of trades that they want to make and the timing of these trades. This type of software would normally require a monthly subscription but the introducing broker may meet this cost as part of the fees that their client pays them.
Most people who are involved in trading will agree that using an introducing broker is a lot easier that dealing with a clearing firm directly. While a fee will have to be paid to the broker, the range of services that they provide can make these fees good value for money. When the client finds an introducing broker that they are happy with, it can be the start of a business relationship that could last for many years.