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Forex Brokers: Types and Kinds

Discussion in 'Forex Broker Discussion' started by adamsmiths, Mar 28, 2016.

  1. adamsmiths

    adamsmiths New Member

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    The forex broker is one of the foremost important parts of the FX trade. There are mainly three types of brokers to be found in the market. One has to know their workings, so as to decide what kind of FX broker would be perfect for them. There are mainly two different types of brokers: Dealing Desks (DD) brokers and No Dealing Desks (NDD). Dealing Desk brokers are also called Market Makers, while No Dealing Desks can be further divided into sub-categories: Straight through Processing (STP) and Electronic Communication Network + Straight through Processing (ECN+STP). It is noteworthy that almost all types of brokers provide the traders with numerous helpful trade platforms such as mt4, mt5, ctrader etc.


    Market Makers or Dealing-Desk brokers: All the forex brokers who operate through Dealing Desk (DD) brokers or market making brokers make money by trading spreads and trading against their clients in the liquidity (financial) market. The brokers who belong to this category do not connect their clients directly to the network of banks and other finance institutions, but they act as counter-party in trade to their client. And they make money by getting you to make as little profit as they can. Here’s how market makers make money: they provide both a “sell” and a “buy” quote, which means that they’re catering to and taking care of both the buy and sell orders of their clients. And also, they are unaffected by the decisions of a particular trader. Because market makers control the prices at which specific orders are executed, one can also deduce that they are in a position to set fixed spreads.

    NDD or Electronic Brokers:Non Dealing-desk brokers are the ones who do not possess a “dealing desk”, and they don’t trade against the traders as counter-parties. This type is further divided into two sub-categories---Electronic Communication Network (ECN) and Straight through Processing (STP). NDD brokerage platforms’ source of income is the small (and fixed) percentage of profit that is earned by the customers/clients charging a small commission or by marking up the spread slightly. They simply act as a medium for the traders to connect with the liquidity market. They are fully STP or STP+ECN.

    STP and ECN Brokers:STP is an acronym for “Straight through Processing” system. While trading through an STP broker, traders are connected directly to their liquidity providers who in turn can access the inter-bank market. ECN means Electronic Networks Communication. These connect the platforms to the interbank market electronically.
     
  2. AwaberA

    AwaberA New Member

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    Here are two more obvious types of broker: reliable and unreliable. For example, ACFX broker recently lost the licence and didn't informed the clients about that. That's obviously unreliable one.
     
  3. tiptip

    tiptip New Member

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    I am glad I am using FreshForex, I don't have to worry about stuffs like this. My broker is regulated with the least spreads in the market.
     
  4. Martha

    Martha New Member

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    There are two types of broker regarding regulation,regulated broker and unregulated broker. Always choose a regulated broker because trading with unregulated broker is risky and your money with these types of brokers are not safe.



    http://fxdailyreport.com/top-forex-brokers/
     
  5. tiptip

    tiptip New Member

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    I think there are only two types of broker, as a lay man, you only need to know two, Market makers and ECN broker. An example of an ECN is FreshForex. These types of brokers works for the best interest of their traders. They have large source of liquidity and therefore are the best for those who want top trade fulltime
     
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