Forex Brokers with a Dealing Desk
Richard Montana | November 2, 2022
If you are looking for a forex broker, then you may be weighing up your options between the different types of forex brokers that are available to you. The choice is really between non-dealing desk brokers (NDD) and dealing desk brokers (DD). Both have advantages and disadvantages that we will cover in this guide to help you make an informed decision according to your own preferences.
What is a dealing desk forex broker?
Dealing desk brokers, also known as market makers, are a type of forex broker that take the opposite side of their client’s trades, by setting the bid and ask price and waiting for a trader who would place an order at these prices. The dealing desk brokers process the trades in two ways, either placing clients against each other or hedging the trade themselves.
Brokers that use a dealing desk may or may not intervene in the execution of orders, depending on the individual brokers execution policy. In most cases, dealing desk brokers keep trades safely within their own liquidity pools and do not require external liquidity providers. This means that dealing desk execution is mostly based on the trust you have in your broker.
What is a non-dealing desk forex broker?
A broker without a dealing desk sends your orders straight through to the market without any interference. This means that you can get your trade executed at the best possible bid/ask prices at all times without there being any conflict of interest.
No dealing desk brokers can further be broken down into Straight Through Processing (STP) brokers and ECN brokers, which use electronic communication networks (ECNs).
STP forex brokers work in such a way that they have their customers’ orders directly programmed to their liquidity providers who have an access to the interbank market.
ECN forex brokers have their client’s network with other orders in the ECN network. This liquidity pool can consist of banks, hedge funds and retail traders.
Dealing desk vs non-dealing desk forex brokers
Dealing desk brokers decide the bid and ask price that you will pay on a currency pair. This means that they can set any price that they wish whereas a non-dealing desk broker can give you access to the best prices on the forex market. NDD brokers have deep liquidity pools which reduces slippage and makes sure your trades get executed as fast as possible.
When you trade forex, you will need to pay your broker a spread which is the difference between the bid and ask price. DD brokers spreads tend to be higher but they don’t usually charge you a commission fee. On the other hand, an NDD broker can have spreads from as lows 0.0 pips, but will usually charge an additional commission fee for their service.
What are the advantages of a dealing desk forex broker?
- No commission fees
- Fixed spread accounts
- Lower minimum deposit requirements
- Trade with micro/mini lot sizes
What are the disadvantages of a dealing desk forex broker?
- Spread mark-ups
- Lack of transparency
- Increased slippage
- Conflict of interest
Who are the best dealing desk forex brokers?
There are hundreds of DD brokers that you can trade forex with. The majority of them will offer a great selection of major, minor and exotic currency pairs. Below you can see a selection of our best forex brokers with a dealing desk.
ASIC, BaFin, CFTC, DFSA, FCA, FINMA, FMA, FSA, FSCA, JFSA, MAFF, MAS, METI, NFA
Conclusion: is a dealing desk forex broker right for me?
It really depends on your trading strategy and investment size. If you only have a few dollars to trade with, then your options may be limited to a dealing desk broker as many ECN brokers have a minimum deposit from $200 and up. If the deposit is not a problem and you don’t need access to fixed spreads, I would personally stick to non-dealing desk brokers as I find that they tend to have lower overall trading costs without any potential conflict of interest.
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