Forex brokers will basically assist you in buying in selling foreign currencies with the provision of trading platforms and the necessary tools and techniques. These brokers charge fees for from their clients for their operations. Forex brokers are of various types.
DEALING DESKS : these brokers help the traders by setting their bid and ask limits and helping them to take advantage of the situation. These are basically market makers. They make profits because of the help of the difference between the buying and selling prices and they normally work without the help of an external liquidity provider. However, some people are of the opinion that dealing desks take undue advantage of the traders and exploit them for personal benefits.
STP : It stands for ‘Straight Through Processing’ mode. Under this system there is no role played by the broker. Here the transactions are fully computerized. There is hardly any human intervention, be it for the purpose of making the initial payment or doing the final settlements. STP basically saves time and money and it I more reliable as automatic methods tend to make lesser mistakes as compared to humans.
ECN : These are the ‘Electronic Communication Network’ brokers. These are basically the links between the small traders and their liquidity providers. It helps by setting a technological set up called the FIX Protocol, that lets the broker and the liquidity providers know about their bit of responsibilities. It charges fees on per transaction basis and they trade on a ‘no dealing desk’ mode.
