If you’ve traded for some time now, you probably already know the answer to this question:
Why do brokers provide trading education?
We all know it’s important to know what you’re signing up for, and when you start, you should know what you’re doing.
Education can make these things happen when you’re trading.
So, the quick answer to the question is: because it’s essential.
And this answer leads us to another question:
Why is trading education important?
First off, let’s take a quick trip down memory lane.
The Rise of Retail Brokers
In the beginning, investing was exclusive to wealthy individuals who could pay for a broker’s services. It usually took a long time before investors could even initiate a trade.
That means not everyone could trade in the market.
Everything changed when the fire nation attacked.
As you can imagine, brokers back then served as middlemen who did the legwork for investors. Back in the day, if you didn’t have deep pockets, you stayed out of the financial markets.
But then the internet came.
With the advent of the internet, trading became easier. The rapid innovation of technology allowed for trading platforms and online connections.
Now, traders can trade with just one click. And brokers didn’t have to travel by seas or by air to open a position for the investor.
So, online brokers emerged. And because a lot of them came out, the market became extremely competitive.
With a competitive market comes competitive prices. Costs have drastically fallen, and even an ordinary person can now avail to trade in the world’s biggest market.
That’s when the forex market came out, and it instantly became a big hit.
But There’s a Problem
Problems come when there is innovation, but of course, it’s almost always solved by innovation too.
Almost everyone with a small capital can trade in the forex market. But that doesn’t mean all traders know how to trade correctly and profitably.
In other words, although the market is accessible, not all traders are smart enough to deal with it.
And the fix to this problem? Trader education.
Forex Trading is Complicated
Forex trading is when you exchange one currency for another. Simple enough, right?
When it comes to the financial markets, nothing is as simple as it seems. Trading currencies entail complex processes. That’s true even if you only must click one button to start trading.
And without sufficient trading education, it’s easy to get lost in this confusing maze. What are spreads? What are the major currencies? How do exchange rates move? Which factors affect the currency’s strength? What in the hell is a “double-top”?
You can’t trade without understanding these.
And that’s the truth.
Although forex trading doesn’t require you to be an Ivy League graduate with a Ph.D. in everything, you still need to be educated enough to know what’s happening.
True, your broker will teach you the basics. Sometimes, they’ll provide some commentaries and materials.
But if they don’t offer comprehensive educational materials for your learning, you’re basically on your own.
ETFinance broker, for example, is known for its impressive and multiple-level library of forex educational videos.
What Makes a Good Trading Education?
For a broker to attract and retain more client traders, they provide value-adding features to the trading platform and products.
And educational materials are part of those features.
Educational materials typically include:
Articles and blogs related to trading and financial markets
E-books that provide comprehensive lessons about the markets, trading, and analysis
News and daily updates which might also include commentaries on the recent market movements
Calendars, technical and fundamental tools, and daily signals
Of course, different brokers can offer more materials other these. Traders will learn faster and can trade better when the learning materials are beneficial.
If trading education is enough, the trader can make better trades. Therefore, the chances of profits are higher. Who wouldn’t like that?
And when traders stay profitable with a broker, he/she will remain with the broker for longer. To the broker, that’s important.
Traders Forge Their Path
More importantly, when the trader education from the broker is good, a trader is better equipped to forge his/her path.
They will not forever be dependent on other people’s opinions to make their decisions. In other words, a good broker trading education allows the trader to think on their own.
Overall, brokers provide trading education because of its benefits to both the trader and the broker.
For brokers, suitable educational materials prove their effectiveness as a broker. Trader education also gives them better chances of having more satisfied clients.
For traders, education is equivalent to forging their future. It lets them make better trading decisions and allows them to trade on their own.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes.