How to choose your best broker?

Posted by sgtmarkets from the Business category at 23 Jan 2019 01:35:50 pm.

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Regulated Forex brokers refer to legal entities that act as a liaison between traders on the forex market. The best online forex brokers are provided with market prices of various currency pairs by large banks such as Bank of America, Citi and Goldman Sachs. These big banks act like liquidity providers for brokers but don't accept retail clients, so to be able to trade forex, you need a forex broker.

To choose the best forex broker, it's good to know the various types of brokers on the market. There are four types of forex brokers: Market Makers (DD), Straight Through Processing (STP) brokers, No Dealing Desk (NDD) brokers, and Electronic Communications Network (ECN) brokers.

Market makers maintain Dealing Desks (DD) and only make markets for foreign exchange traders. The dealing desk broker buys from traders who want to sell, and sells to traders who want to buy. This broker makes money when the trade loses and loses money when the trader wins. This involves a significant and substantial risk of price manipulation and may not be suitable for active traders and brokers.

The No Dealing Desk (NDD) broker deals with the provisions of the interbank currency market. They provide forex traders with real market quotations and have no intention of making profits by manipulating prices. NDD brokers make a profit by charging trading commissions or by adding markup to spreads.

Straight Through Processing (STP) brokers send merchant orders directly to their liquidity providers - usually banks that participate in foreign exchange trading between banks. STP brokers may have a number of different liquidity providers. Increasing the number of banks and liquidity in the system means better deployment and better order execution. STP brokers are preferred by many forex traders because of transparency and fast execution of market orders.

The ECN broker allows all their clients to trade freely by sending competitive offers and offers to the market. Traders can place pending orders in spreads and act as market makers. ECN brokers only charge a small fee for their services and are liked by most traders and other online forex trading professionals because of their tight spread, transparency transactions, and low commissions.

When choosing a forex broker, you need to know several factors: first and most important, this is spread and slippage, which are your transaction costs. Another thing to look for is the regulation and transparency of operations, and finally - professional and reliable customer support.

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