Different Types of Forex Brokers

Types of Forex Brokers

Your Forex Trading success hugely depends on the broker which you are using. So, it is necessary to select the best broker for your trading. But before you are going to choose the right one, you need to know what are the types of Forex Brokers.

Based on some criteria, forex brokers can be different kinds. Some are suitable for new users with a small investment, and some are best for the investors with huge money. However, here I am going to discuss most common types of forex brokers.

DD – Dealing Desk:

This dealing desk is also known as the market maker. Here the broker who will operate the brokering is a market maker. Market makers have several things to do. Market makers usually offer fixed spreads. They may also elect to quote above or below actual market prices in different times.

They often get paid through the spreads. He will offer his customers a two sided market which comes from a specialist forex trader who operates as part of the broker’s in-house dealing desk. If the price is allocated on, the agent will end up taking another side of any given transaction. The market maker also can choose to offset the trade immediately if the trade executed large enough.

NDD – No Dealing Desk:

There is no dealing desk for a broker in this type as you see in the name. The broker has access to the interbank market. It can be both the STP or STP+ECN broker. There are no requoting prices for an NDD which mean that you can trade without any restrictions during the economic announcements. Spread that offered by a no dealing desk trader is lower.

However, this is not fixed for the trader or the broker. So, the trader can increase pointedly when instability is growing during significant economic statements. The broker may charge for each trade or choose to increase the spread as profit for him. Here the STP means transactions are fully computerized and are directly handled on the interbank market and there is no broker intervention.

On the other hand, the ECN says the Electronic Communication Network. ECN brokers usually earn money by charging a commission on the traded volume. If they are expert enough, it is easy to make huge money with the system. To be a broker in NDD, there needs a strong knowledge of the FX market.

MTF (Multilateral Trading Facilities):

The main task of an MTF exchange broker is to ensure that buyers and sellers of financial instruments can come together. This need to be according to the nondiscretionary rules. This is not a regulated exchange. But this operates under the same standards as per forex trading market.

This is a good way for trading currency and other things, and this is a transparent policy for both buyers and sellers. The broker will guarantee the price efficiency and the clearing of transactions. If you compare this with the traditional trading, then it is far better for the traders.


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