Since there are different broker types, it is important that you know at least the rough differences between the provider types in order to decide on the broker that can make the right offer for you.
What types of brokers are there?
The brokers available on the market can be distinguished in particular according to which trading offer they provide. For example, with one broker you can only trade stocks, funds and bonds, while the other broker specifically provides foreign exchange trading, the so-called Forex trading.
In the overview ins, it is particularly the following types of brokers that currently make their offer:
- Online broker
- Forex broker
- CFD brokers
- Futures broker
- Social trading brokers
We would like to give a brief definition of these brokers below, so that you know which type of provider to consider in your personal broker comparison.
Online brokers: Trading stocks, funds and other securities
The term online broker is quite global, because basically all brokers operate exclusively via the Internet anyway. Usually, however, the term online broker means that they are so-called stock or securities brokers. This means that online brokers offer trading in the following financial instruments in particular:
- Shares
- Bonds
- ETFs
Sometimes online brokers have now also expanded their range somewhat and also offer trading in CFDs and some derivatives.
Forex brokers: Trading with foreign exchange
If you want to trade with foreign exchange, you should particularly keep an eye on the Forex brokers appearing on the market when comparing brokers. The so-called forex brokers provide the trading platform so that you can trade foreign currencies through it. Foreign exchange trading is called Forex trading in the technical language and you need a trading account with a special broker, which also appears on the market under the name Forex broker.
CFD broker: Trading with contracts for difference
One type of broker that has enjoyed increasing popularity in recent years is the CFD broker like sgexness.com/mt4/. These are brokers that provide trading in the so-called contracts for difference. CFD trading has gained significant popularity in recent years, at the latest since binary options trading is no longer allowed within the EU. CFD brokers function very similarly to Forex brokers, except that the focus is not on trading foreign exchange, even though numerous CFD brokers are also active in the field of Forex trading. However, the focus is on trading CFDs, with almost all CFD brokers now offering the following underlyings:
- Indices
- Shares
- Commodities
- Foreign exchange
Some CFD brokers also offer contracts for difference with cryptocurrencies as underlyings.
Futures brokers: Trading with futures contracts
Very special brokers are the so-called futures brokers. These provide a trading platform that has a connection to the futures exchanges. The futures brokers live up to their name, because they usually only offer trading in futures. Sometimes, options can also be traded in addition, so this aspect may also be important for you when comparing brokers.
Social trading brokers: Trading in the community
Strictly speaking, social trading brokers are not special types of brokers, at least not in the sense that certain financial products are offered for trading. For example, in the area of Forex and CFD brokers, there are some providers who also call themselves social trading brokers. The main characteristic of this type of broker is that social trading is offered. This often means that traders can trade in the community, copy orders from professional traders and exchange information with each other. Social trading is especially designed to help beginners make fewer mistakes and learn from the experience of experts.