February 7

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Do I Need a Broker to Trade Forex?

By Jack Morgan

February 7, 2020


​Do I Need a Broker to Trade Forex?


Trading forex can be challenging if you do not have the skills or experience to understand the market. This is the reason most people who get into forex trading use the services of a broker. But with the growth of the internet and advancements in technology, both hardware, and software, anyone can get into forex trading. You might or might not need a broker, depending on how comfortable you are with the market. Below, we will look at both sides of the argument.

Forex Trading


In its simplest form, forex trading is trading two currencies against each other. Then you trade them back and make a profit from the difference in the buying price and the selling price. A trader can look up how different currencies are being traded against each other to see where they can make some good money. Brokers have all the information they need to make these decisions at hand because they invest in software that gives them this information in real-time. If you want to go it alone, you have to find a way of getting the same information they do, learn how to analyze it, and know when to buy or sell.

​" You have already traded forex without a broker at the airport. But to do it seriously and make money, you will need a broker"

Trading Without a Broker


If you want to trade forex without a broker, you can start by checking different market quotes online and finding forecasts of how different currencies will be traded in the future. Next, find an online trading platform that helps you buy and sell different currencies.

You can also borrow money in a currency that has low-interest rates so you can repay the money with no difficulty. You then take this money and purchase a currency that has a higher interest rate. Your profit will come in the difference between the two interest rates because the second currency, the one with a higher yield, will give you more money than you borrowed. You could also just wait for the second currency to appreciate and sell it off at a profit.

Advantages and Disadvantages of Trading Without a Broker


The biggest advantage of trading without a broker is not paying any commission. Brokers take a cut of your profits for their services. So, if you trade without a broker, everything you make will land in your account.

Trading without a broker also lets you gain valuable, transferable trading skills that you can use to trade other items like gold and shares. Reading the market and knowing when to buy and sell is the backbone of any trade where you want to buy something at a low cost and sell it at a higher cost. You can use this knowledge on any type of trade.

Trading without a broker also comes with some disadvantages, with the biggest one being that you lose leverage. A broker ensures that our money is not being put at risk by capping your leverage from something like 200:1 to 2:1. The bigger ratio means you can make money very quickly and lose it at the same rate.

" ​The biggest disadvantage to trading without a broker ​is that you lose leverage. A broker ensures that our money is not being put at risk by capping your leverage from something like 200:1 to 2:1. The bigger ratio means you can make money very quickly and lose it at the same rate."

Brokers also have information you might not have. They have been doing this for a long time and can see the market in ways you cannot. Therefore, it is less risky to trade with a broker.

Conclusion


Trading forex without a broker has huge upsides and downsides. If you can learn to read the market and learn how to buy and sell currencies, you might not need a broker to handle forex trading for you.

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About the author

Jack Morgan is the senior broker tester at Financeeo. Bringing more than 20 years experience from the online broker industry. Jack has spent many hours rigorously testing brokers.

​Jack Morgan

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Do I Need a Broker to Trade Forex?

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