When it comes to unpredictable forex trade, high liquidity, low barriers to entry low transaction coat etc attract people in an entangle way. But when we think to enter in this market we need to aware of fraud because this market is over the counter market, hence there is no regulatory body. It is proven by the records that 90% of the traders lose their money, only 10% of the trader’s teats the fruit of success due to their diligence conscience, smartness etc, hence it not the place where a man can be prosperous within a week. Eventually, this market is full of opportunist and they are here to take an instant opportunity.
There is a proper chain in full trade, for example, if someone wants to trade then it places an order, this order could pass to the Dealing desk or it can go to the non dealing desk. Let’s check out the difference between dealing desk and non dealing desk.
Which is better dealing desk or no dealing desk
Dealing desk brokers are known as market maker where as no-dealing desk broker gives access to liquidity market. Dealing desk broker have fixed spreads where as no-dealing desk have variable spreads.DD take the opposite side of the traders so if an individual trader sell some order broker will buy this and vice versa, which is why dealing desk broker is known as market maker. On the other side no-dealing desk provides directly access to the liquidity provider, hence it act like a bridge between client and liquidity provider. No-dealing desk may charge commission from the client.
Types of no-dealing desk and their characteristics
STP (straight through processing) and ECN (electronic communication network) are two type of no-dealing desk in our forex industry. Suppose a trader places an order, broker simply passes it to the liquidity provider. Both the no dealing desk brokerages are considered good by many of the traders, because of its faster execution. It is not like that a trader need to open an ECN account or any STP account with that broker.Traders favor ECN/STP because these firms often offer competitive spreads. Generally, ECN/STP brokers provide many trades onto the liquidity provider who offers tight spreads as much as possible. In STP model, more traders means more trade which further means more earned money for brokerages.
Since the ECN brokerage gathers data from different sources, so most of the time spreads with ECN is always tighter. ECN main work is to match client’s order to the liquidity provider. In spite of having so many benefits, there is some disadvantage of ECN brokerages. One of the disadvantages is many ECN brokerage have higher minimum deposit condition. Because of that many traders are not able to open an ECN account according to his interest. Hence ECN/STP are no-dealing desk is a trading network which aim is to execute transaction directly to the liquidity provider with no middle man in between. The no-dealing desk system gives the advantage of flexible trading operation to the participant all over the world with greater transparency.