Different Types of Forex Brokers - Types of Forex Brokers

ECN - Electronic Communication Network Broker, STP - Straight Through Processing Broker, NDD - Non Dealing Desk Broker, DD - Dealing Desk Broker and Market Maker Broker

Different Types of Forex Brokers List - below is an explanation of the Different Types of Forex Brokers.

ECN - Electronic Communication Network Forex Broker - Types of Forex Brokers

ECN Broker stands for Electronic Communication Network, these ECN forex brokers are connected to the interbank network directly through an electronic communication network and forex orders from the ECN Forex Broker are placed straight to the electronic network. The ECN Broker will display different forex quotes from different liquidity providers. The quotes placed by these ECNs network of liquidity providers are direct from the interbank network and forex orders are executed directly in the interbank forex market - once a trader trading with an ECN broker places a forex order with their forex broker.

These ECN brokers will charge commissions + spread for every forex trade transaction order. For these ECN Broker execution technique every forex trade is matched to another in real time over the interbank network - ECN Network.

STP - Straight Through Processing Forex Broker - Types of Forex Brokers

STP Broker stands for Straight Through Processing, the STP forex brokers will send client trading orders direct to their Forex Liquidity Provider, the Forex Liquidity Provider is a big bank with deep liquidity to trade on the inter-bank network.

An STP Broker can either have one forex liquidity provider or many liquidity providers.

The best thing about STP Forex Brokers is that forex traders can place their forex trades immediately on the online forex market with instant execution because they have access to the interbank market through their STP forex broker.

STP Forex Brokers will not charge commissions, but will charge spreads on forex trades. Because forex traders have access to the interbank markets trading execution, there's no re-quotes on the forex orders neither is there any forex order waiting for execution, the trade order execution is instant.

NDD - Non Dealing Desk Forex Broker - Types of Forex Brokers

NDD stand for Non-Dealing Desk forex execution of orders, these NDD forex brokers do not implement a dealing desk and this makes this type of order execution to have less trading restrictions as opposed to the Dealing Desk Forex Trade Execution.

NDD Execution means that forex trades from the traders account will be executed direct to the online inter-bank exchange FX market. The forex orders will be matched with other trading forex orders in the interbank exchange market using the broker Non Dealing Desk trade order execution model.

DD - What is a Dealing Desk Forex Broker? - Types of Forex Brokers

DD stands for dealing desk, these DD forex brokers have a dealing desk where they can match forex orders & execute forex orders in online inter bank exchange market.

The forex trader trading with a DD broker will get a lot of requotes.

Dealing Desks will issue forex traders with a lot of order re quotes, meaning prices of forex orders are not real time and the broker can requote a forex trader's order if the price of the market changes quick enough before the broker's dealing desk places the order online or before they match the forex order in the online interbank forex market.

Dealing Desk forex brokers therefore means that order execution of forex orders is not instant & therefore this forex execution model may mean that forex orders executed using a DD Broker are not executed as quickly as when compared to an ECN trading broker or an STP broker.

Market Maker Broker - Types of Forex Brokers

Market Maker are forex brokers which have a dealing-desk where they can match forex orders in house without going to the interbank exchange market.

Forex orders can also be executed against their forex traders - meaning the broker can take the opposite side of a traders open forex trades. This forex broker can make the decision to either execute a forex order that is the opposite direction of a trader's order thus if the trader makes a loss the broker makes a profit, & if forex trader makes a profit the broker makes a loss.