Forex Trading Brokers Types - ECN, STP, NDD, DD and Market Maker

Forex Brokers Types - ECN, STP, NDD, DD, Market Makers Forex Brokers

The list below shows the different categories of brokers classified depending on their execution method.

ECN

ECN Account stands for Electronic Communication Network, these ECN Account forex brokers are connected to the interbank network directly through an electronic communication network and the orders from the ECN Account are placed straight to the electronic network. The ECN Account will display different orders from different banks. The quote placed by these ECNs network of banks are direct from the to the interbank network and orders are executed directly to the interbank market once a trader trading with this ECN account places an order with their forex trading broker,

These ECNs account will charge commissions + spread for every forex trade. For these ECN Account execution method every trade is matched to another in real time over the interbank network - ECN Network.

STP

STP Account stands for Straight Through Processing, the STP Account forex brokers will send client orders direct to their Forex Liquidity Provider, the Forex Liquidity Provider is a big bank with deep liquidity to trade on the interbank network.

An STP Account provided by an STP broker can either have one Forex Liquidity Provider or many liquidity providers.

The best thing about STP Accounts is that forex traders can place their forex trades immediately with instant execution because they have access to the interbank market via their STP forex broker.

STP Accounts will not charge commissions, but will charge spreads on forex trades. Because Forex traders have access to the interbank market execution, there is no requotes on the forex orders neither any order waiting for execution, the execution is instant.

Difference between STP and ECN Execution

NDD

NDD stand for Non-Dealing Desk forex execution of orders, these NDD Account forex brokers do not implement a dealing desk this makes this type of execution to have less trading restrictions as opposed to the Dealing Desk Execution.

NDD Execution means that trades from the forex traders account will be executed directly to the online interbank exchange forex market. The orders will be matched with other orders in the interbank exchange market using the forex broker Non Dealing Desk order execution model.

DD

DD stands for dealing desk, these DD account forex brokers have a dealing desk where they can match orders and execute forex order in the online interbank exchange market.

The forex trader trading with a DD account will get a lot of requotes.

Dealing Desks will issue forex traders with a lot of order requotes, meaning prices of orders are not real time and the broker can requote a forex trader's order if the price of the market changes quick enough before the broker's dealing desk places the order online or before they match the order in the online interbank forex market.

Dealing Desk accounts therefore means that order execution of forex orders is not instant and therefore this execution model may mean that trading orders executed using a DD Account are not executed as quickly as when compared to an ECN account or an STP account.

Market Makers

Market Maker are forex broker accounts where Market Maker forex brokers have a dealing desk where they can match orders in house without going to the online interbank exchange market.

Forex orders can also be executed against their traders - meaning the forex broker can take the opposite side of a forex traders open trades. This forex broker can make the decision to either execute a forex order that is the opposite of a forex trader's order thus if the trader makes a loss the broker makes a profit, and if the trader makes a profit the forex broker makes a loss.

Regulated Brokers

Regulated Forex Brokers are those that operate under a financial regulatory authority, these companies will adhere to a strict code of ethics lest they lose their operating license, these are the genuine companies that are trusted by traders as they do not carry out unshady trading practices against their clients because they are audited by their regulators annually

Regulated + STP Execution is the best choice to trade with.

Forex Brokers Type - Forex Brokers Types - ECN, STP, NDD, DD, Market Makers - Forex Liquidity Provider - Forex Liquidity Providers