IQ Option is one of the most popular names in the Forex industry. It is a Forex trading brokerage that has been operating for four years now. Are you interested to know more about developing a brokerage. Are you interested to know more about developing a brokerage in the Forex model? Then here is a quick IQ Option review on brokerage.
Mostly, this forex broker business commonly referred as Non-Dealing Desk can be parted into two main types depending on certain factors. They are
- The Straight processing broker type or STP: This procedure is generally exploited by the monetary firms to enhance the speed at which they conduct transactions. By transferring the information stored electronically from one end to another and finally reaching out for settlement without re-entering these same details manually. Such strategies are repeated for the entire happening sequence of trading.
For example, the fx brokerage sent the transaction to clients from its originated platform to its cashing provider automatically. This, in turn, depends on many factors like
- Spread, which is the sum or pip’s generated on calculating ask and bid price. This specific pip is lost by the client once he made a sure order on his platform. Basically, this amount goes as a profit to both the broker and the liquidity provider.
- Commission percentages are charged depending on the development progress stated for a country. i.e. while a developing country charges almost 5 pip’s, the secondary ones take at most 2 pips’.
Thus, more precisely, the spread, commission and profit made by the efficient brokers contribute to their revenue stream and is always associated with a low-risk factor. Hence is known as the A model brokerage or the prime brokers.
- The electronic mode of communication network broker: Also known as the closed loop dealing desk, deals with such forex brokerage procedures that force customers to purchase and sell via using an fx broker and is also considered as the counter-party of the deal. So, if the customer makes a profit, the broker has to bear with his loss and vice-versa. In the most cases, the participating clients have no or little practice with the fx exchange market.
- Even though the Spread, Commission and achieved profit through the efficient conduct of trade contributes the brokers’ fee, the counter playing client loss also result in brokerage revenue. They usually face a high-risk level as the clients’ income is the inverse of the fx brokers loss and stands to represent the B class or retail business broker models.
- A Hybrid formation of both the STP and the closed one: The procedure adopted by brokerage depends partly on A class such as sending a sector of its clients through STP to the respective liquidity providers and passes the left part or sector to the broker counter-party gains from the customer’s loss and is definitely a feature of B model.
All other revenue deciding factors remains the same except the risk level which is medium in this specific type. There are still a lot of people interested in how its legitimacy status goes.
Novices to the Forex investment industry also turn to IQ Option with the hope that it is a legitimate broker. But is it true or is it a scam? Can IQ Option offer something more than the competition and stand out as a reliable broker? My detailed review below provides you with a first-hand insight into the workings of IQ Option.