A forex broker acts as an intermediary between individuals and the banks that they are using to buy and sell currency. They might compare prices across a selection of banks and let you know which one will be the best for you. You hold what would seem like a bank account with them, so you need to have your identity verified and this is what is used to make payments to and from while you are trading.
How do brokers earn?
Brokers will make their money through fees and commission. So they will charge you for their services but may also receive commission for making certain investment recommendations. This means that you have to be wary as they make recommendations that they feel will make them more money rather than ones that will make you more money. This will not always be the case of course, but it is wise to ask them why they are making certain recommendations and why they are against others so that you can build up a trust with them. However, even if it is not intentional, they may get a warmer feeling about a company that they know will give them the best commission, even if they are not consciously aware of it.
Choosing the best broker
Obviously, if you are concerned that the broker may only be making certain recommendations because they stand to gain from it, then you will want to choose one that you can trust. It is worth doing some research first to find out more about them. Start with asking people you now whether they use one and if they can recommend anyone. Then look online to find out more about them and see if there are any reviews about them or the company they work for. Talk to them as well, ask them questions about the service they provide and how they choose who to recommend so that you can get a feel of what they are like and if you think that you will be able to trust them to guide you with your investments.
It is wise to be very careful when you are selecting a broker. They are not regulated in the same way as other types of banking and therefore things are left to you to control. This is why it is wise to do a lot of research before you choose one. Make sure that you feel that you can trust them to look after your money and give you unbiased advice. You may have to pay more money in fees to achieve this but it could be well worth it. Take your time to read up about them, talk to them and generally build up a trust. If you can get personal recommendations then this would be fantastic but if not, online ones will be the next best thing, but make sure they are from trusted sources and independent from the company. Make sure that you look across a selection of places for reviews as well.