Hi @LaughingCharlie,
The fact that “no actual currencies are changing hands” is not due to the fact that your counterparty is a retail forex broker.
Consider how hedge funds will trade on institutional ECN platforms such as the GTX marketplace offered by FOREX.com’s parent company, GAIN Capital. The participants here still do not physically exchange currencies, even though the counterparties are major financial institutions.
Even in FX futures markets, where physical delivery is possible 4 times a year, the overwhelming majority of FX contracts are closed prior to physical delivery. That’s because most forex traders want to speculate on exchange rates or hedge their exchange rate exposure, not handle physical currency which only adds costs.*
Therefore, the fact that no actual currency changes hands is another benefit of trading through a retail forex broker, as it lets you speculate on exchange rates with lower trading costs than physical delivery would require. We discussed the other benefits of having a retail forex broker as your counterparty in this post: Which is the best stock broker to scalping
*If physical delivery is what you are after either for business or travel expenses, FOREX.com Money Transfers offers this service at competitive rates.