Looking for online Forex Brokers?
Finding the right Forex Broker is a challenge. There is a large number of regulated and unregulated forex brokers online that compete for your trades. Finding out whether the financial institutions with which you are considering opening an account are brokers or market makers is a good place to start your decision making.
The Truth about Forex Brokers!
In the forex industry the word “broker” is used loosely to cover all forex companies. Generally, a forex broker cannot be a market maker. In theory, a forex broker is somebody who will pass 100% of the risk from traders to counterparty while a market maker in simple terms is a firm who takes on the risk of all trades against him.
Brokers vs. Market Makers:
A Forex Broker transmits all client orders to another counterparty for execution thus maintaining no open positions. The broker can make money either (a) on price differences between prices where clients trade and prices at which client trades are covered or (b) by charging a commission on trades. STP is an example of a method by which a broker can operate in that all client orders are Straight-Through-Processed i.e. transmitted to and executed by another counterparty.
Market makers establish quotes on which their clients trade. Client trades are executed against the market makers capital. Market makers are helpful because they are ready to buy and sell as long as the investor is willing to pay a specific price. This helps to create liquidity and efficiency in the market. Market makers, essentially, act as wholesalers by buying and selling forex to satisfy the market participants; the prices set reflect market supply and demand. Usually, when the demand for a currency pair is low and supply is high, the price of the pair will be low. On the other hand, when the demand is high and supply is low, the price of the pair will be high.
So what are Forex Brokers?
If in the forex industry the word “broker” is used broadly for all forex companies then how can one choose between brokers and market makers? You will first have to decide whether you want to work with a financial institution that acts as a broker or an institution that acts as a market maker. Both have advantages and disadvantages:
A broker will typically have no conflict of interest as all client trades are offset with counterparty but he will not be able to control execution and or pricing as this is handled by the counterparty that actually executes client orders.
A market maker will have a conflict of interest as he stands to gain from client loses but he will have control of execution allowing for larger trade sizes. Additionally the market maker can control his own pricing stream.
Is TFIFX a Market Maker or a Broker?
The TFIFX model of business is a hybrid in that it combines the advantages of both the broker and the market maker model of business. We are a broker in that we cover essentially all client positions in order to avoid any conflict of interest. We are a market maker in that we maintain our own treasury room and all client orders are executed by a human dealer. This allows us flexibility in quoting for larger transaction sizes (up to 200 lots per click) and maintaining fixed spreads irrespective of (a) amount and (b) market conditions.
View Message from Chairman >>
"We now live in a financial world that we have never lived in before. At TFI, we have responded to the challenges of change by investing in technology and human resources. Despite all this, our core focus remains our clients, our most valuable stakeholders.
I consider it my personal duty as Chairman to ensure that all of our clients are treated fairly and with the respect they deserve. We will always act in a transparent manner and with the highest degree of integrity. This is embedded in the culture and mentality of our company and these are principles from which we will never deviate.
We exist in a very competitive marketplace and we understand very well that you, the client, has many choices. Our proposition to you is that in TFI, you will find a solid partner you can trust and rely on. We look forward to welcoming you on the trading floor."
What are TFIFX principles of client engagement?
We believe that Forex Trading should be fair and transparent for everybody. We have been a premium Regulated Forex Broker by giving our clients the ability to trade all the major currency pairs offline since 1999 and online since 2006. In addition, we have consistently been keeping our spreads stable even under extreme market volatility. We are here to provide you with all the necessary forex trading tools and information to improve your forex trading skills. Why? Because we want to be considered as one of the premium choices in Europe within the next decade as well.
We have been engaging clients through three core principles:
Transparency - Our price feeds is directly derived from the interbank market. We generate income by adding a Spread to these prices but we do not otherwise intervene or manipulate our pricing feed according to client positions. All clients see the same prices, regardless of account size.
Fairness - We have gone to great lengths to ensure that conflicts of interest between forex broker and clients do not arise. We manage positions that result from client trades and do not profit from client losses or client deposits. We have aligned our long term interests with the interests of our clients as our profit is directly related to transaction volume.
Integrity - Client orders are filled and forex transactions are executed at market rates. We do not use automated methods to increase our profits at the expense of the client but instead we are willing to accept brokering losses in order to ensure that our clients get the best available market price at any point in time, and at all market conditions.
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