Direct to Market Brokers vs. Dealing Desk Brokers

There are two models of online Forex brokers that Forex traders can choose from. Both models have benefits that are attractive for different trading styles or client level.

Experience tells us that profitable traders and more experienced Forex traders prefer to trade using the direct to markets Forex broker model that ensures no conflicts and trading on true market prices (not market making).   

Market Makers (Dealing Desk) Brokers operate differently to an STP broker as the dealing desk will not send clients orders to the bank liquidity providers but instead will take the opposite side to their clients orders, in other words they take the risk on your trades.

The Market Maker will make profit on your losses and will make a loss if you win, therefore there is a serious conflict of interest between client and broker. To help market making brokers protect themselves from profitable Forex traders, they implement restrictions and limits on their clients such as minimum market distance levels, minimum time you must be before committed to a trade before closing it. This stacks the odds of the Market Maker winning dramatically in their favour. The logic is simple and restricts scalping and hedging traders the ability to make quick profits from fast order opening and closing and increase the chances of generating losses for the broker.

An STP broker (Direct to Markets execution) is the opposite. It provides traders with unrestricted trading rules and conditions, in fact they pass on to their clients the same institutional conditions that they receive from the Liquidity Banks. This ensures no conflicts of interests and also, allows profitable traders to trade the markets and make money in full confidence.

The Direct to Markets Forex Broker makes money based only on volumes traded through either a commission or a mark up of the core spreads. Again, the logic is simple, the more successful a trader is the more Forex volumes the client will trade and this leads to higher broker profits.

At Yadix, as our volume levels are high, we also offer a share of our STP profits back to our clients to ensure that each trader can benefit from a guaranteed return on investment on their trading activity. The Forex rebates any client can earn is 1 pip per lot ($10).

To learn how you can make money for your trading volumes, please contact your account manager or the support team.