Friday, November 5

Forex costs: Market Maker, STP and ECN Broker

There are  three different categories of forex brokers cfd trading , between which there are sometimes big differences – not only in the way they operate but also in the way they are calculated for their own services. So before you decide on a particular broker, you should be aware of the differences between them, as not all of these types are suitable for beginners. The broker types listed below are further divided into  dealing desk (DD) brokers  and  non-dealing desk (NDD) brokers  .

Market Maker (DD)

This type of Forex Brokers Canada provides prices for a currency pair   and thus simulates a market. It fulfills three tasks: First, it makes the supply and demand rates for certain currency pairs available to its traders; Secondly, he undertakes to enter into deals within a predefined framework for the courses he has provided; and last but not least, he bears the initial risk of the respective position in his bookkeeping.

The market maker generates its profit from the  spread between the best online trading platforms  and selling price . Put simply, this means: the trader’s loss in a transaction is the profit of this forex broker. For this reason, the image of the market maker tends to be negative, because the impression can quickly arise that he is interpreting the courses to the disadvantage of his traders. However, since the market maker provides the prices in both directions, by influencing a price he would simultaneously undermine his own position. So it is also to his advantage if the  course works both ways .

This type of provider can   be the right choice for beginners  as well as  traders with a small trading volume .

STP Broker (NDD)

STP stands for  Straight Through Processing , which translated into German means “immediate through-processing “. This is also the distinguishing feature of this broker: He  forwards your orders directly to the market – more precisely, to a bank or liquidity pool, thereby avoiding conflicts of interest. Ideally, several banks advertise the orders, after which the  best available price is executed  .

This type of Forex Brokers Canada reviews  calculates both  spreads  and  commissions . In most cases the spreads are  variable  and depend on the liquidity of the respective market. Even if the fixed spreads appear cheaper at first glance, the spreads plus commissions of the NDD brokers are much more lucrative in the long term. The commission is calculated  per order or lot traded  . In principle, they are so low that they only matter if there is a very low trading volume.The STP broker also gives its customers the opportunity to  enter Forex trading NZ with a very  low budget .