Trades prime brokerage is some of the terms that get thrown by many folks in their day to day undertakings without really understanding its meaning. However, tradesprime brokerage refers to group of services that are provided by great investment banks that hedge money, professional investors as well as broker dealers. Typically services such as operational support, custodial services, lending and financing, as well as technical support are some of the services offered by prime brokerages. Prime brokerages generate their income from charging cost of financing the leveraged position of the client as well as some back office services rendered.
Forex on the other hand is basically an over the counter market that links different banking services providers. The concept of over the counter nature of this market introduces numerous counterparty risks, as the possibility of the business counterpart going bankrupt and seize to be able to fulfill their required financial obligation is always present. One of the major challenges when it comes to over the counter market is determining the credit worthiness of the parties involved as most liquidity givers tend to limit clients they do business with. For example, the greatest liquidity givers in the foreign exchange market would be highly unlikely to carry out transaction with small scale operators. This creates market gap between large scale liquidity providers and small scale retail operators. It is this gap that necessitates the need to have trades prime broker. Prime brokerages are able to grant small players access to the liquidity services offered by large scale operators by acting as middle men in the market, or acting as counter party to the individual trades.
Small scale Forex brokerages might find it difficult to tap in pools of funds from large scale liquidity retailers. However, through the services of prime brokerage, they are able to access the funds that would otherwise be out of their reach. Existence of extra liquidity in the market leads to impacts such as decreased slippage as well as lower spreads. Some prime brokerages will extend provision of their services to individual clients. However, they might require the individual to deposit at least a fixed minimum amount of dollars in their firm for them to offer their services.
Prime brokerage also allows their users to employ Meta trader 4 platforms while carrying out investment decision. This platform enables traders to analyze the various aspects surrounding Forex market by linking them up with market analysis as well as obtaining advice from experts. It also offers a platform where mobile trading is made possible. Existence of trading robots frees the client from day to day market analysis as it formulates and implements trading strategy, as it takes the role of expert advisor. However, prime brokers nowadays are selective on who their firm enters into a relationship with by examining factors such as how stable the business is, who the end clients are, and profitability of their relationship with the client.
Most big name providers of banking services also diversify in the provision of prime brokerage services to the interested clients. However, most of them have set a minimum amount of capital that a client shall have in order to engage in prime services. In order to obtain more information on Forex market and prime brokers, visiting tradesprime.com might offer you with much needed insights prior to decision making.