Forex terms can seem confusing sometimes. Terms like forex broker and introducing brokers that look much like twin sisters are just guilty of causing such confusion.
In this piece, I will explain what an introducing broker is and how to become one.
Who Is An Introducing Broker?
An introducing broker, which is always shortened as IB, is a broker that links a trader to a merchant for trade operations and executions. In my own dictionary, an IB is an affiliate, only a slight difference exists between the two,
Also, an IB is an intermediary between a trader and a Future Commission Merchant(FCM).
An IB receives buy and sell orders but delegates these orders to Merchants that execute them. This is because an IB cannot execute a trade on his own. All this process is already automated and therefore, the IB doesn’t have to move a finger.
In addition, this kind of broker shares commission with the merchant usually the forex broker based on agreements with the merchant.
Furthermore, an IB can either be a subsidiary of the merchant or a partner to the Future Commission Merchant.
Just like an affiliate marketer links a product to a buyer, an Introducing broker links an order to a clearing broker for execution.
Also, an IB can either be an individual or an organization.
The main job of this broker is to receive orders and send them to a merchant that executes them.
An IB does not accept money from a client. He makes his money through commissions on trades.
Lastly, an IB can help to attract clients by offering free signals, free tutoring, and so on.
How To Become An Introducing Broker(IB).
Becoming an IB depends on the principles and agreements that a merchant works on.
There are no restrictions to becoming an IB and it does not necessarily require advanced knowledge of the forex market.
Each trading merchant has its requirements for choosing a person to be an IB.
Also, while choosing a company to work with, one must be sure that such a company is trustworthy.
Some forex brokers offer the opportunity to become an Introducing broker on their platform. Examples include;
Frequently Asked Questions(FAQs).
No. A clearing broker is a kind of broker that clears transactions while an introducing broker receives and sends a trade to a clearing broker.
Introducing brokers make money through commissions on trade. These commissions are calculated based on the agreement with a trading company that they link a client with.
Yes. An introducing broker cannot clear transactions alone. Once he receives a buy or sells order, he sends such an order to a trading company that executes the order. d
An Introducing Broker is a broker that links a client to a trading company or merchant.
In addition, the main job of an IB is to receive buy and sell orders and send them to a merchant for execution.
Also, they serve as the intermediate between a trader and the company that executes the buy and sell orders.
It is even safe to say that without an IB, a trader might not be able to execute his trade.
Lastly, these IBs do not charge traders. They make their money through commissions on every trade they receive.
I believe you now know who an IB is.
And I hope you now know that you do not need to give any money to any broker or any person to execute trades for you.
Did you read to this point? Congratulations. No one will be able to scam you of your hard-earned money under the guise of being a filthy broker.
I have fortified you with important pieces of information!
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