Finding the best Forex brokers today can be tough, especially since there are so many to choose from. What most new-traders don’t know however is that there are different types of Forex brokers available today. Their choice of type may depend on the kind of account and trading method they want to adapt. That being said, following are the different types of brokers today.
Best Forex brokers – Market Maker
Brokers like these typically take the opposite spot of their client. Market Makers typically have an in-house dealing desk where they come up with a two-sided market that will be offered to their traders. Once the trader makes their decision, the broker will take the opposite side of the transaction regardless of what it is. The goal here is to initiate enough volume on both sides of the market while at the same time capturing a specific percentage of the spread. In some cases, the Market Maker may choose to offset the trade quickly if the amount is too large for their taste. The great thing about Market Makers is that they provide clients with charting programs and news feed for update purposes.
Best Forex brokers – No Dealing Desk
Known as NDD, the No Dealing Desk brokers come up with composite quotes that are derived from different providers. Basically, the different providers give the NDD their top markets. In response, the NDD broker then executes these transactions according to the specific requirements of their clients. The method of profit for brokers like these is either through commission or by widening their bid and offer spread.
Best Forex brokers – Electronic Communications Network
This is basically a Forex trading platform where everything is done electronically. In here, different traders can easily initiate transactions without divulging too much of their identity. In some cases, even professional Market Makers will start to participate. The main attraction of this type of broker is that it doesn’t reveal much information about traders who want to transact in private.
Multilateral Trading Facilities
This is an interesting type of Forex broker and comes with non-discretionary rules. In here, the buyers and sellers and transact with each other following Forex-specific rules albeit not regulated by any recognized body. Hence, most of the transactions may depend on both experience and trust. The main advantages of this method are that every transaction is faster, allowing traders to make timely-decisions for their investments. The payment for brokers here are also cheaper.
Note that the type of Forex broker a trader deals with is just one part to being a currency trading success. Learning the full concept of Forex as well as being specific with broker choices is important. Note that the best Forex brokers are those that provide their traders with as much help as possible during trading. Other factors that must be taken into account include the leverage provided, the capital required and even if they offer a trial. Don’t forget to compare and assess each broker before making a decision.