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There are indeed companies that trade forex for you. But not all of them are legal.
Forex is the biggest financial market in the world. With an average of $6.6 trillion traded on the forex market every day, everyone can see the huge profit potential. Unfortunately, not everyone can easily understand how forex works.
Lots of beginners begin forex trading every year. Some of them are willing to learn step-by-step, suffering some losses along the way, and then mastering the trade after a long time has passed. Some others won't bother to learn, instead looking for companies that trade forex on behalf of their investors.
As a matter of fact, there are 3 types of companies are indeed trade forex for you:
- Legal companies: Hedge funds, pension funds, banks, and asset management companies.
- Illegal companies: Forex brokers and traders.
- Copy trading providers: Companies or forex brokers that provide copy trading platforms.
As you can see, not all of them are legal. Let's discover more about each company below.
Companies that Trade Forex for You Legitimately
Hedge funds, pension funds, banks, and asset management companies may engage in the foreign exchange market on behalf of their clients.
Hedge funds are investment funds that pool capital from various investors and use a variety of strategies to generate returns. Some hedge funds offer managed forex accounts, where investors allocate their funds to the hedge fund, and professional traders within the fund manage the forex trading on their behalf.
Some historically prominent hedge funds that have been involved in forex trading include Bridgewater Associates, JPMorgan Asset Management, Citadel, Man Group, Caxton Associates, and Tudor Investment Corporation.
Export-import businesses and manufacturing companies usually ask their banks to trade forex on their behalf. This usually involves investment banks like Citibank, HSBC, UBS, Barclays, and JPMorgan Chase. Retail investors might also request that their asset managers trade foreign exchange to enrich their portfolios.
Additionally, pension funds usually ask whether their clients want their funds to go to bonds, stocks, currencies, and/or other types of financial assets. If you apply for a new pension fund and choose currencies as one of your preferred assets, then the company will trade forex for you.
Some well-known pension funds and asset management that manage retirement funds include Vanguard Group, BlackRock, PIMCO, State Street Global Advisors, UBS Wealth Management, Charles Schwab, and Fidelity Investments.
Companies that Trade Forex for You Illegitimately
Two types of entities may illegally proclaim themselves as companies that trade forex for you. First, forex brokers. Second, forex traders.
Financial market supervisory institutions have outright prohibited forex brokerages from trading on behalf of clients. This usually applies in the US, Europe, Japan, and other well-known financial jurisdictions. As such, any forex broker that offers similar services is doing illegal business.
Why the policy? Well, forex brokers act as intermediaries and/or market makers in the forex market. It means they either connect sellers and buyers in the market or become one of the counterparties in a forex transaction. They have a huge vested interest in your losses/wins, so, they should not trade forex on behalf of their clients.
Several examples of brokerage companies that trade forex illegally are 24FX, 24 options, 4XP, 770capital, and Absolute Markets.
Regarding forex traders, common people may also illegally offer forex trading services. Individuals and teams who want to trade forex for you legally have to prove that they are well-trained, own sufficient working capital, and are fully certified to do so. They cannot gain licenses by self-proclaiming themselves as "experienced traders with millions of profit every year."
For forex brokers and traders, there is only one way to trade on behalf of others without going through such laborious licensing processes. That is, through copy trading platform.
Copy Trading Platforms
Some regulatory bodies allow forex brokers to offer copy trading platforms for their clients, such as eToro, ZuluTrade, cTrader, NAGA Trader, Covesting by PrimeXBT, etc. On the platform, you may copy the transactions done by professional traders.
However, YOU have absolute control over your funds.
Copy trading platforms prevent forex brokers from directly trading on your behalf. Hence, it protects you from a conflict of interest with your broker.
Certain copy trading arrangements may permit professional traders to trade on your behalf using funds in your account. However, you will still be able to revoke their access at any time.
If you are looking for companies to trade forex for you, simply choose among licensed forex brokers that offer copy trading platforms. You will then be able to browse hundreds or even thousands of professional portfolios and duplicate whichever you think is good in order to gain similar results.
Conclusion
Those are the 3 types of companies that trade forex for you. To facilitate understanding, here is a more concise and easily comprehensible table.
| Legal Companies | Illegal Companies | Copy Trading Providers | |
| Company Type |
|
|
Forex copy trading platform |
| How They Work | Indirectly trade forex upon the requests of its clients | Forex brokers, forex traders, or individuals who trade forex without having any forex trading license or regulations | The platform allows you to copy trade from other traders |
| Examples | Bridgewater Associates, Citibank, Vanguard Group, Charles Schwab, and many more. |
24FX, 24 options, 4XP, and 770capital | eToro, ZuluTrade, cTrader, NAGA Trader, Covesting by PrimeXBT |
Despite all the ways and advantages of working with companies that trade forex for you, it would be much better if you learn on your own from the beginning until you can truly trade forex wisely. You could use forex demo accounts as the starting point to trade real-time without any risks.
9 Comments
Steven
Jan 3 2023
I've been in the world of trading for about 3 months, and I feel happy and comfortable investing my funds. Even though there were many challenges that I had to go through, losses, deposits that didn't go through due to some technical problems, besides that my experience and skills have improved over time. And finally I just get profit in trading. And yeah, I've heard that places to keep money, like banks, retirement funds can help trade the money you invest or save there. But because I myself can not control or oversee the entry and exit of you. So here I want to ask, how do we find out the allocation of funds that I have entrusted to earn income in trading traded by third parties? And yes, is there revenue sharing between me and the third company? because as far as I know there is no free help…..
kenny
Jan 10 2023
Carla
Jan 3 2023
So here I want to help explain, remember that a broker is a broker or an intermediary market that connects companies with investors. It is here that they can also profit from the instruments they trade from various companies that offer investments. And the brand also wants to benefit from you as a trader there. They accept spreads, commissions and swaps from the investment funds that you deposit there…. So, what happens if the party that wants profit from the trader helps the trader trade your money? It's not that there is a concern that there will be misuse of funds to gain more profits (the broker).
Tristan J
Jan 3 2023
Carla: I agree with your statement, but the explanation in the article above states that if the trader makes a profit, the broker will also benefit. For example, they benefit from the spreads offered, commissions from each trading that varies, and usually there are swap fees that they offer.Of the 3 types of fees that benefit traders, which one gives the broker the most profit?And it is also said in this trade that loss traders can also provide a source of profit for brokers, why is that? How does it work to benefit from the loss?
Starla
Jan 3 2023
Tristan J: I want to help answer your confusion. Well, it's true that 3 of what you mentioned are sources of profit for the boker. Brokers benefit from the mark-up spread provided by banks or financial institutions as liquidators. The commission fee is a deduction in dollars for each volume in trades made by a trader. Swap is the difference in the benchmark interest rate of the currency sold on the forex market. Of the three types of costs, both provide benefits for balanced brokers. What we have to pay attention to is interest (swap) in trading. Because not everyone likes interest, now there are many brokers who provide trading with free swaps and yes with low spreads and commissions too. So you as a trader need not worry, many fees are charged by the broker.
Robert
Jan 3 2023
Well, I totally agree with the opinion expressed here that a forex broker who acts as a trader trading money on your behalf is illegal (worried about pooling funds). How did it happen? Don't they understand the world of trading better than traders in general? Just like this, as a trader, you want to find a broker that is legal in your country. But the fact is that almost every broker is not licensed to operate by the trade control agency in every country (including mine). And as long as I trade at the best brokers, most of the broker websites have to be opened using a VPN. This means that we have to be careful when choosing a broker, instead of handing over our money to the broker. Moreover, the broker is not licensed in his country.
Queen
Jan 3 2023
During my time as a trader in the forex market, the service that I like is "Copy Trading". Because it provides services for traders to copy trades of professional traders. Both novice traders and experienced traders will benefit from their trading. For novice traders, it can help trading even without experience. If an experienced trader can copy a trader's strategy, knowing the level of risk in the strategy. Although copy trading does not guarantee a trader's profit. The question is, what broker do I love to provide good and safe copy trading services? I really need a broker recommendation that provides this service.
Richard
Jan 3 2023
Queen: Basically, copy trading is a forex trading tool to help traders automatically copy positions opened and managed by professional traders. The method that allows a forex trader to copy a particular strategy, any trading action performed by the copied forex trader, such as opening a position, setting Stop Loss and Take Profit orders, or closing a position, and the funds of the copy trades provided by the copying forex trader. If you want to find a broker that is good at copying its traditions, pay attention to the following things
If it were me, I would choose Pepperstone which provides pretty good trading copy and complies with the 4 things above. For other brokers, I don't know... Maybe someone else knows
Stevani
Jan 3 2023
Queen: Choosing a platform that provides this feature must also be careful. With the choice of a credible copy trading provider platform, the trading data cannot be influenced by the master trader and if you can pay attention to the person's mental health. So because of that, the chosen broker must have a good and safe (regulated) system. I would like to recommend a few brokers that I think provide good and safe copy trading services.