When choosing any of forex brokers that we have today, we do so knowing what kind of services we are offering each of them. It is therefore so in this article we will try to classify types of forex brokers that we have today and try to differentiate based on their type of service they offer technology etc …
As we can see in the attached image that we can establish two groups according to the type of management do we ask about our operations run:
- Types of forex brokers No Dealing Desk (NDD). No negotiating table.
- Types of forex brokers Dealing Desk (DD). With table for negotiation.
The above classification is based on whether the brokers carry your order to buy or sell the market, or otherwise offered intermediaries to be the counterpart to your oden:
You make a purchase 1 lot of Forex broker <=> The seller offers 1 lot of Forex
This can be an advantage and a disadvantage, depending on the type of trader who we are and reliability of our broker.
Types of forex brokers according to their technology
Sorting technology forex brokers, we can classify these mainly in:
- Forex brokers with technology STP
- Forex brokers with technology ECN and STP
The forex brokers or STP Straight Through Process technology
We can say that the types of forex brokers that have STP (Straight Through Process) technology , base their foundation technology in any of the brokers who rely on electronic markets with what they seem in some ways to those who claim to be ECN. In other words, the forex brokers are STP, route orders from their customers directly to their liquidity providers .
These types of liquidity providers, are as a rule large banks or big banks that provide liquidity for the operation to be carried out at a price set by the market.
The Forex market how is it organized?
This set of acronyms and nomenclatures think is better understood if we assume that we know the market Forex, despite what was originally not considered a centralized market think this explains that there are different types of change in foreign exchange, depending not only on the economic situation, but the rates applied at all times by the liquidity provider.
What is the difference between STP or ECN forex brokers?
Generally, the main difference is that the STP forex brokers usually offer their customers the best price investors “BID” (which would be the bid price) and the best price “ASK” (bid price) in a way completely separate and it is possible that the price of “BID” of a supplier and price “ASK” provider of an entirely different take.
Instead ECN brokers to use no technology STP, what they will do is get the best price “Ask” and “BID” from all suppliers but once chosen the best are not separated, being chosen that is the least ” spread “or difference between ASK and BID.
The advantage is that if we have access through ECN + STP technology, which is for example get the best price of all suppliers ASK and the best BID price of all suppliers , even more advantageous situation for the investor or trader forex.
Another fundamental difference is that in the ECN forex brokers guy if we see the market depth while in the forex brokers STP type is not possible to be separated information.