Forex brokers are divided into two basic types
Would you like to invest in forex or other commodities or stocks, then you will surely need to choose the right broker. Who actually, but is such a forex broker and what are the differences between them? The following article will try to answer this.
Forex brokers are divided into two basic types, this brokers are called dealing desk, DD brokers and no dealing desk, NDD brokers. Dealing desk brokers are sometimes also called market makers or market makers. In contrast, NDD brokers are further divided into Straight Trough Processing, STP and Electronic Communication Network, ECN brokers.
Each broker works on a different principle.
earn on spreads which means the difference between the sale and purchase price, and provide liquidity to their clients. Market makers or market makers are not called for nothing. If a DD client opens a trading position, then the broker creates a counter-position to give him immediate liquidity. Even the forex rule is the basic rule, every seller must find the buyer and vice versa, quite certainly, the financial markets function. So if you close the loss position, the broker earns and vice versa. However, it is not a mistake to choose this broker, for traders the advantage of constant spreads. Just choose a broker that falls under CNB regulation and do not have to worry about unfair practices.
works a little differently, but the result is the same. When the client enters a business order, the broker begins to look for a business partner in the market. Let's imagine it as bridging, for which they will pay to the commission. These brokers will find a counterparty, which can often be hedge funds or large banks.