Community Forex Questions
Dealing desk or no dealing desk Forex broker?
Choosing a forex broker is an important part of your trading decisions. The broker will have a considerable impact on various aspects of your trading. You will need to understand the trade structure that will be utililsed. For instance a dealing desk broker , or market maker is a broker that will take the other side fo your trades. The broker will be setting the bid and ask price. Then he will wait for the trader to take advantage of these terms. The broker will make a profit by buying at a lower price and sell at a higher one. He will also be taking advantage of the spreads between the ask price and the bid. If you prefer fixed spreads then you will prefer this type of broker.
On the other hand a non dealing desk broker will not be taking the other side of the client's trades but rather work with liquidity providers to give the client variable spreads. Then these will be matched up with traders who can take the other side of the trade.
On the other hand a non dealing desk broker will not be taking the other side of the client's trades but rather work with liquidity providers to give the client variable spreads. Then these will be matched up with traders who can take the other side of the trade.
Fixed spread always indicates a B-book broker. Broker has no interest to take market risks providing fixed spread if only this is a regular b-book scammer. A-book broker can have only floating spread, however in reality you can never know 100% if your broker a-book or b-book.
Dealing Desk (DD) and No Dealing Desk (NDD) are terms used to describe the types of execution models employed by forex brokers.
1. Dealing Desk (DD):
In a Dealing Desk model, also known as Market Makers, the broker acts as a counterparty to the trader's trades. When a trader places an order, the broker executes it within their own internal market. This means the broker takes the opposite side of the trader's position. While DD brokers provide liquidity, there's a potential conflict of interest, as the broker may profit when traders lose.
2. No Dealing Desk (NDD):
No Dealing Desk brokers, on the other hand, operate as intermediaries connecting traders directly to the interbank forex market. NDD brokers can be further categorized into Straight Through Processing (STP) and Electronic Communication Network (ECN) brokers. STP brokers pass orders directly to liquidity providers, while ECN brokers link traders to a network of participants, including banks, institutions, and other traders, facilitating a more transparent and competitive market.
Choosing between a Dealing Desk and No Dealing Desk broker depends on a trader's preferences and trading style. DD brokers might be suitable for beginners due to simpler execution, but NDD brokers are often favored by experienced traders for their transparency, potentially lower spreads, and absence of a conflict of interest. It's essential for traders to carefully consider these factors, along with fees, execution speed, and overall reliability, when selecting a forex broker.
1. Dealing Desk (DD):
In a Dealing Desk model, also known as Market Makers, the broker acts as a counterparty to the trader's trades. When a trader places an order, the broker executes it within their own internal market. This means the broker takes the opposite side of the trader's position. While DD brokers provide liquidity, there's a potential conflict of interest, as the broker may profit when traders lose.
2. No Dealing Desk (NDD):
No Dealing Desk brokers, on the other hand, operate as intermediaries connecting traders directly to the interbank forex market. NDD brokers can be further categorized into Straight Through Processing (STP) and Electronic Communication Network (ECN) brokers. STP brokers pass orders directly to liquidity providers, while ECN brokers link traders to a network of participants, including banks, institutions, and other traders, facilitating a more transparent and competitive market.
Choosing between a Dealing Desk and No Dealing Desk broker depends on a trader's preferences and trading style. DD brokers might be suitable for beginners due to simpler execution, but NDD brokers are often favored by experienced traders for their transparency, potentially lower spreads, and absence of a conflict of interest. It's essential for traders to carefully consider these factors, along with fees, execution speed, and overall reliability, when selecting a forex broker.
Jul 28, 2021 23:12