Tue. Oct 4th, 2022

Fxtriangle | Market analysis | Managed trading

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Types of Forex brokers

2 min read

A dealing desk broker – also referred to as a ‘market maker’ – will take trades from its clients without necessarily trading within the underlying market itself. They will offer a quote supported the underlying market value, then sit on the opposite side of the client’s trade.

When a dealing desk broker accepts a trade, they’ll or might not trade the underlying market to hide their exposure.

This practice of keeping trades in home is referred to as running a ‘B book’, and it enables dealing desk brokers to stay all of the profit on its clients’ losing trades. They may also offset this exposure with other clients’ opposing trades that are similarly kept ‘in house’.

When a corporation says it is a ‘no dealing desk policy’ it means it provides trading with immediate execution within the underlying market. This is different from trading through a dealing desk, where the broker is probably going to stay on the opposite side of your trade. With the ‘no dealing desk’ model, the broker offsets its exposure on its clients’ trades by matching each trade full within the underlying market.

When there is no dealing desk, the corporate might only take advantage of the dealing spread per trade. They will not have any financial interest in whether your trade makes or loses money.

You will have access to a high-liquidity pool filled with competitive bid and ask prices, and you will know that – whatever position you are taking – your broker is not taking a position against you. This is why, when choosing a broker, it is important to see whether or not they adopt a dealing desk or a no dealing desk model.

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