When choosing your preferred broker, one of the most important
things to ask yourself is, what kind of broker do I need to look for?
Below is a simple comparison to help readers understand the
main differences between a dealing desk and a STP, ECN or DMA brokerage.
Conflict or Interest
An STP broker executes all orders with a no conflict of
interest policy. Orders are received and immediately sent through to the FX
banks that provide liquidity.
The Dealing Desk on the other hand will keep orders in house
and not execute to the real markets. You are trading on a virtual market and
one that is not obliged to follow any real market patterns.
Brokers Profits
A direct market access broker makes profits based on the
spread clients trade on, or a commission (if ECN), at no point does the broker make any money
based on clients losses.
A dealing desk benefits from both sides, from the
spread/commission and from losses generated on your account.
The Dealing Desk model is a serious conflict of interest
that can cause your trading strategies many problems.
Profitable Traders
A true STP, ECN and DMA broker can accept any profitable
trading strategy like scalping and EA users. As the broker takes no risks,
there interests are helping clients generate profits and more volumes. As such,
the inter-bank brokers will provide more favorable conditions and tools for
traders to use.
If you are trading with a Forex robot or scalping strategy,
you must consider that the conflicts of interest may restrict you from maximising
your potential profits using a dealing desk broker.
Trading Conditions
Trading conditions are not only in the shape of spreads or
commissions, but also restrictions on your trading account.
A inter-bank broker will offer you more favourable and less
restricted trading conditions on important trading elements such as stop loss,
take profit and pending orders.
The dealing desk on the other hand will restrict your
trading strategy by enforcing minimum levels and limits on your orders.
No comments:
Post a Comment