What is a Forex Broker
A Forex broker works as the middleman between traders and market liquidity. A Forex broker may execute buy and sell orders on behalf of his clients charging a trading spread or/and a predefined trading commission.
Forex Brokers are divided into 2 major categories according to the way they execute orders: The Dealing Desk (DD) Forex Brokers and The No Dealing Desk (NDD) Forex Brokers.
(1) Dealing Desk Brokers (DD) or Market Makers
■ Market Makers
Market Makers Forex Brokers are trading on the opposite side than their clients. They charge fixed spreads and usually no trading commissions. This type of broker is ideal for Forex beginners.
(2) No Dealing Desk Brokers (NDD)
No-Dealing Desk Brokers are divided into ECN and STP Forex Brokers.
■ ECN Forex Broker
An ECN Forex broker is providing its clients with direct access to the global Forex market. ECN brokers charge variable spreads and sometimes trading commissions too. They are considered the most competitive of all Forex Brokers.
■ STP Forex Broker
An STP Forex Broker is passing its clients' orders directly to the liquidity providers. STP brokers are offering fixed spreads and sometimes they charge trading commissions too.
General Related Terms
What is Forex Margin
Forex Margin is the minimum amount demanded by a Forex broker in order to execute a trade.
What is Forex Margin Account
The Forex margin account is the account that holds deposited money for trading.
What is Forex Margin Call
A margin or marginal call occurs when a Forex broker demands more money to be deposited by a client/trader.
What is a Forex Dealer
Forex dealers are individuals or firms who trade for their own account and risk, in contrast to Forex brokers who trade on behalf of others.
What is Spread
In Forex, the spread is the difference between currency buying and selling price.
What is CFD (Contract for Difference)
A contract for difference is a specialized trading instrument that provides speculation on currencies, stocks, indices, commodities, and other financial assets.
What is a Forward Contract
A forward contract which is also called forwarding is a non-standardized contract between two parties to buy or sell an asset at a specified future time at a specified price agreed upon today.
What is a Forex Broker