Finding the best Forex brokers today means sifting through hundreds of brokers available in the market. It might take some time, especially for the new trader. With enough information however, individuals should eventually settle on a broker that meets their specific needs.
Straight Through Processing
As the name implies, this type of transaction doesn’t necessitate the presence of a broker. Instead, trades are processed directly to the interbank market. This type is mostly known as STP.
Electronic Communication Network
Also called ECN, this broker type provides traders with ample information about the Forex market. They display accurate and timely order book information, increasing the transparency of the situation. Transactions are usually dealt to the interbank market directly. Brokers make money in this type of system through a percentage of the volume of the trades.
No Dealing Desk
Abbreviated to NDD, this type is directly connected to the interbank market. The spreads in this Forex broker are low and not fixed, allowing traders to trade even during economic announcements. They can be a combination of STP and ECN broker and provides some of most favorable composite quotes. Brokers of this type usually charge on a commission basis.
Also known as a Market Maker, this type comes with a fixed spread and is even paid through this. Typically, the Market Maker broker type takes the side opposite to the trade of their clients. The main goal here is to catch a part of the spread, allowing them to pursue equal volumes on both corners of the market. By doing this, they will be decreasing the risks they take with every trade.
Retail Market Maker
This is the most common type of online Forex trading and offers individuals with a wide array of services. For new traders, this is possibly an ideal choice due to the simplicity and ease of trading.
Multilateral Trading Facilities
This type of broker is not regulated but does operate on the same rules as the others, therefore decreasing the risks. What’s great about the MTF type is that it is more transparent than most due to the lack of regulations. Hence, buyers and sellers will be at a better position trading through this system. Brokerage fees are also lower and order execution is known to be faster than others.
Choosing the Best Forex Brokers
Regardless of what type of Forex broker is chosen, traders are still advised to assess the broker thoroughly before committing with them. For new traders, the best broker type would be those that allow great transparency in the market, providing them with the necessary details they need to complete a transaction. Don’t forget to check out different service providers and compare them with each other to ensure that you are getting the best out of all the best Forex brokers available.
Note that even with the best Forex brokers availabe, traders should have ample knowledge about the Forex market in order to perform good trades. The broker is simply a tool but the trader will ultimately be responsible for how the account goes.