Types of Forex Brokers floor
The first step in choosing a forex broker is to find out what your selection criteria. You do not just walk into a restaurant, to know what to call the dish immediately, right you are not? Not unless you're a regular customer here, of course. More often than not, you check their menu first to see if they can provide what those dishes.
There are two types of flooring forex broker is: Dealing Desk (DD) and No Dealing Desk (NDD). The Dealing Desk forex brokers floor also known as the market makers (Market Makers), while the floor NDD forex broker can be further subdivided into brokers STP (Straight Through Processing) and Electronic Communication Networks (electronic communications networks) + Straight Through Processing (STP + ECN).
Dealing Desk forex brokers floor, also known as Market Maker is what?
The floor forex broker that operates through mechanisms Dealing Desk Brokers make money through buying and selling difference (spread) and the implementation of the reverse transaction with their customers. Also known as market makers, floor brokers The Dealing Desk forex trading literally create a market and the artificial exchange rates for their trading clients. While you might think that here is thicker a conflict of interest, really is not. Market makers provide both price and the purchase price, which implies that they are neutral with the decision of the trader.
Since market makers control prices (because they generate) . It also means that there is very little risk to them in adjusting a gap fixed purchase (later you will understand why this is better). In addition, customers of the floor Dealing Desk brokers do not actually see the exchange rate of the interbank market. Do not fear, competition between exchanges forex broker is very harsh but the exchange rate offered by the Dealing Desk brokers floor is nearly equal, if not identical to the exchange rate in the interbank market.
Delivery forex brokers at a floor Dealing Desk forex basically works this way:Suppose you place an order to buy EUR / USD with a volume of 1 lot (100,000 units) in Dealing Desk brokers floor. To fill your order, your broker will first seek orders sell EUR / USD in the number of their clients that fit with your line or your line is transferred to a supplier liquidity (ie a significant audience that is willing to buy or sell financial assets).
In this way, they minimize the risk and make money from differences in trading without having to participate as part of presence in your order. However, in the absence of any purchase orders that match your search and they can not be a liquidity provider accordingly, they will be involved as the opposite side of your line. Please note that the different forex brokers floor with the risk management policies vary, so check with your forex broker floor on this. Floors No Dealing Desk forex broker is what? As suggested reviews from the name, the floor No Dealing Desk forex brokers no Dealing Desk should not transfer the orders of the customers through "trading desk" (Dealing Desk). This means that they do not engage the opposite side of customers' orders, they simply link the two sides together.
NDDS like those bridging: they build a structure on another aspect
insurmountable or very difficult to overcome the terrain to connect the
two areas together. NDDS may charge a small commission on each transaction or increasing differences in trading up a bit to make money.
The floor NDD forex broker can be STP or all of both STP + ECN.
STP Forex broker floor is what?
There are two types of flooring forex broker is: Dealing Desk (DD) and No Dealing Desk (NDD). The Dealing Desk forex brokers floor also known as the market makers (Market Makers), while the floor NDD forex broker can be further subdivided into brokers STP (Straight Through Processing) and Electronic Communication Networks (electronic communications networks) + Straight Through Processing (STP + ECN).
The floor forex broker that operates through mechanisms Dealing Desk Brokers make money through buying and selling difference (spread) and the implementation of the reverse transaction with their customers. Also known as market makers, floor brokers The Dealing Desk forex trading literally create a market and the artificial exchange rates for their trading clients. While you might think that here is thicker a conflict of interest, really is not. Market makers provide both price and the purchase price, which implies that they are neutral with the decision of the trader.
Since market makers control prices (because they generate) . It also means that there is very little risk to them in adjusting a gap fixed purchase (later you will understand why this is better). In addition, customers of the floor Dealing Desk brokers do not actually see the exchange rate of the interbank market. Do not fear, competition between exchanges forex broker is very harsh but the exchange rate offered by the Dealing Desk brokers floor is nearly equal, if not identical to the exchange rate in the interbank market.
Delivery forex brokers at a floor Dealing Desk forex basically works this way:Suppose you place an order to buy EUR / USD with a volume of 1 lot (100,000 units) in Dealing Desk brokers floor. To fill your order, your broker will first seek orders sell EUR / USD in the number of their clients that fit with your line or your line is transferred to a supplier liquidity (ie a significant audience that is willing to buy or sell financial assets).
In this way, they minimize the risk and make money from differences in trading without having to participate as part of presence in your order. However, in the absence of any purchase orders that match your search and they can not be a liquidity provider accordingly, they will be involved as the opposite side of your line. Please note that the different forex brokers floor with the risk management policies vary, so check with your forex broker floor on this. Floors No Dealing Desk forex broker is what? As suggested reviews from the name, the floor No Dealing Desk forex brokers no Dealing Desk should not transfer the orders of the customers through "trading desk" (Dealing Desk). This means that they do not engage the opposite side of customers' orders, they simply link the two sides together.
The floor NDD forex broker can be STP or all of both STP + ECN.
STP Forex broker floor is what?
Some forex brokers floor declare that they are an ECN forex broker floor really but in reality they merely have an STP system.
The forex broker that floor system STP network routing orders of their clients directly to the providers of their liquidity, those who have access to the interbank market. NDD STP brokers often have multiple liquidity providers, with each vendor with the purchase price - selling of their own.
Let's assume that your floor STP forex NDD has three different liquidity providers. In their system, they will see three different kinds of quotes on forex currency pairs.
Their system will order the purchase and sale price in order from best to worst. in
this case, the best price is bid toward 1.3000 (high you want to sell)
and the best price towards the 1.3001 ask price (you want to buy low). Price bid / ask now would be 1.3000 / 1.3001.
This is the price that you will see in the trading platform on your computer screen?
Of course not!
Brokers operating your organization from friendly. Your broker has not processed all the trouble in the classification of a free quote.
To compensate for their problems, your broker is often added to a small amount, usually fixed, marked . If their policy is to add a marker pip, the price you see on your trading software will be: 12,999 / 1.3002. You will see the difference sale is 3 pips. 1pip spreads which become 3 pips difference to your purchase.
So when you decide to buy 100,000 units of EUR / USD at 1.3002 exchange rate, your order will be sent via Your forex broker floor and then moved to one of two providers of liquidity A or B.
If your order is approved, the liquidity provider will have an A or B position selling 100,000 units EUR / USD exchange rate at 1.3001, and you'll have a place to buy 100,000 units of EUR / USD at 1.3002 exchange rate. Your forex broker floor will earn 1 pip in revenue.
This change price quote bid / ask and also the reason why most of the STP broker spreads - selling is not fixed. If such a sale margins of suppliers expanding their liquidity, they have no choice but to widen differences in trading in their quotation. While there are some forex brokers STP floor offer the fixed spreads which, most purchases are the difference is not fixed.
The forex broker that floor system STP network routing orders of their clients directly to the providers of their liquidity, those who have access to the interbank market. NDD STP brokers often have multiple liquidity providers, with each vendor with the purchase price - selling of their own.
Let's assume that your floor STP forex NDD has three different liquidity providers. In their system, they will see three different kinds of quotes on forex currency pairs.
This is the price that you will see in the trading platform on your computer screen?
Of course not!
Brokers operating your organization from friendly. Your broker has not processed all the trouble in the classification of a free quote.
To compensate for their problems, your broker is often added to a small amount, usually fixed, marked . If their policy is to add a marker pip, the price you see on your trading software will be: 12,999 / 1.3002. You will see the difference sale is 3 pips. 1pip spreads which become 3 pips difference to your purchase.
So when you decide to buy 100,000 units of EUR / USD at 1.3002 exchange rate, your order will be sent via Your forex broker floor and then moved to one of two providers of liquidity A or B.
If your order is approved, the liquidity provider will have an A or B position selling 100,000 units EUR / USD exchange rate at 1.3001, and you'll have a place to buy 100,000 units of EUR / USD at 1.3002 exchange rate. Your forex broker floor will earn 1 pip in revenue.
This change price quote bid / ask and also the reason why most of the STP broker spreads - selling is not fixed. If such a sale margins of suppliers expanding their liquidity, they have no choice but to widen differences in trading in their quotation. While there are some forex brokers STP floor offer the fixed spreads which, most purchases are the difference is not fixed.
ECN forex broker floor be?
Floor ECN forex broker actually, on the other hand, enables the orders of their customers interact with the orders of "the people" elsewhere in the ECN.
These "participant" may be banks, retail merchants, exchange traded funds and even other forex brokers. In essence, those who participated in the opposite transaction by providing the best bid and best ask that they have.
ECNs also allow their customers to see "The depth of the market." Depth the display market where buy and sell orders of participants in other markets. Because of the nature of ECN, it is very difficult to put in extra amounts of difference, mark-up, so the floor ECN forex brokers often receive compensation through a small commission.
Floor ECN forex broker actually, on the other hand, enables the orders of their customers interact with the orders of "the people" elsewhere in the ECN.
These "participant" may be banks, retail merchants, exchange traded funds and even other forex brokers. In essence, those who participated in the opposite transaction by providing the best bid and best ask that they have.
ECNs also allow their customers to see "The depth of the market." Depth the display market where buy and sell orders of participants in other markets. Because of the nature of ECN, it is very difficult to put in extra amounts of difference, mark-up, so the floor ECN forex brokers often receive compensation through a small commission.
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