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)
Around the year 2000, retail brokers began offering online accounts to private investors, streaming prices from major banks and the Electronic Broking Services (EBS) system. The brokerages were able to provide retail service by bundling many small trades together and negotiating them in the interdealer market, which is dominated by banks. Because the trade volumes were much larger, participants in the interdealer market were willing to provide liquidity for the retail brokers’ accessible prices. Bid-ask spreads are generally higher for retail customers than they are in the interdealer market, but they have been found to narrow as trading volume rises.5) 

Retail forex brokers typically allow traders to set up an account with a limited amount of assets and let them trade online through internet-based trading platforms. Most trading is done via the spot currency market, though some brokers deal in derivative products such as futures and options. Forex trading has been popularised among individual traders because brokers have offered them the chance to trade with margin accounts. These allow traders to effectively borrow capital to make a trade, and multiply the principal that they use to trade by large amounts, up to 50 times their initial capital.3)

Regulate Swiss Surprise

×