Trading Brokers Types - ECN, STP, NDD, DD & Market Maker
Brokers Types - ECN, STP, NDD, DD, Market Makers Brokers
List below shows the different categories of brokers classified depending on their execution technique.
ECN
ECN Account stands for Electronic Communication Network, these ECN Account brokers are connected to the inter bank 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 net-work of banks are direct from them to the interbank net-work and orders are executed direct to the inter bank market once a trader trading with this ECN account opens a trade order with their broker,
The ECNs account will charge commissions + spread for every trade. For the ECN Account execution technique every trade is matched to another in real-time over the inter-bank network - ECN Network.
STP
STP Account stands for Straight Through Processing, the STP Account brokers will send the trader orders direct to their Forex Liquidity Provider, the Liquidity Provider is a big bank with deep liquidity to trade on the inter-bank 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 traders can place their trades immediately with instant execution because they have access to interbank markets via their STP broker.
STP Accounts won't charge commissions, but will charge spread on trades. Because traders have access to the interbank market execution, there is no requotes on orders neither any order waiting for trade 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 brokers don't implement a dealing desk - this makes this type of execution model to have less restrictions as opposed to Dealing Desk Execution Model.
NDD Order Execution means that trades from the traders account will be executed direct to the inter-bank exchange market. Orders will be matched with other orders in the inter-bank exchange market using the online broker NDD Desk order execution model.
DD
DD stands for dealing-desk, these DD account brokers have a dealing desk model where they can match orders and execute order in the online interbank exchange market.
The trader trading with a DD account will get a lot of re-quotes.
Dealing Desks will issue traders with a lot of order re quotes, meaning prices of orders aren't real-time & broker can requote a trader's order if the price of the market changes quick enough before broker's dealing-desk places the order online or before they match the trade order in online inter-bank market.
Dealing Desk accounts therefore mean that the order execution of orders is not instant & therefore this execution model might mean that orders executed using a DD Account are not executed as quickly as when compared to an ECN account or an STP trading account.
Market Makers
Market Maker are broker accounts where MM brokers have a dealing-desk model where they can match orders in house without going to the inter-bank exchange market.
Orders also can be executed against their traders - meaning the broker can take the opposite side of a traders open trade transactions. This broker can make decision to either execute a order that is the opposite of a trader's order thus if the trader makes a loss the online broker makes a profit, & if trader makes a profit the 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 don't carry out unshady practices against their clients because they are audited by their regulators annually
Regulated + STP Execution is the best choice to trade with.
Brokers Type - Brokers Types - ECN, STP, NDD, DD, Market Makers - Forex Liquidity Provider - Forex Liquidity Providers
