Retail forex is forex that is traded through dealers, often by smaller or individual investors. These firms are also known by the term “retail aggregators.” Retail forex trading began to become popularised in the late 1990s with the emergence of internet-based financial trading. At that time, retail forex brokers and dealers went into business to allow smaller traders to get into markets that were previously limited to large-scale businesses and financial institutions.2)
Most retail forex brokerages act in the role of dealers, often taking the other side of a trade in order to provide liquidity for traders. Brokers make money with this activity by charging a small fee through a bid-ask spread. Before the emergence of retail forex brokerages, individual trading amounts less than US$1 million were discouraged from entering the market by high bid-ask spreads.4)
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