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Forex Trading: Is Forex a broker or a dealer?

2019-12-24 15:16:59

We continue in the context of Forex where we will explain everything about whether Forex is a broker or a dealer

 Forex is a company in charge of executing currency exchange and therefore today there is a considerable amount of companies whose objective is to work with Forex in order to carry out over-the-counter currency trading, making a broker naturally an important activity to be performed by a certain distributor , which leads us to wonder if Forex is a broker or a dealer.

Is Forex a broker or a dealer?

When carrying out any Forex transaction it is important to keep in mind that the broker really plays a fundamental role, therefore it is important to know if Forex is a broker or a dealer, since a broker is always in the capacity of bridge between the creator of the market and X client, because here there are no manual interventions at the operating tables, since the processing of these operations is usually done using the computer services, since there appears the detail of “non-distribution controller”.

Broker is a technological corridor, through which the operations of the clients are routed, because it has the ability to have a fixed and dynamic system with it, since it has among its characteristics the detail of sending the requested orders, for this it has a certain negotiating table called Direct Processing (STP), because this allows the differentials that have been received by customers only depend clearly on the creator of the market or in the absence of the distributor, it is good to be very clear that brokers obviously do not work for free, as these usually charge certain fees for executing the service, that is why they are compensated by the creator of the market, because, all operations are taken to the negotiating table of the creator of the market and it is exactly there where the fees are determined , as you will see, everyone has their part when performing Forex operations.

What is the market maker or Forex Distributor?

The first thing we should know about the market maker or distributor is simply that this depends on itself on an operating table, and this is something so simple, because it is nothing more than a method used mostly by banks, or any institution financially, these have the ability to offer an extremely light price in certain currencies, as this is done under the guidelines of the global currency book, as these have the possibility of offering bidirectional prices to customers during the day, as they find in the ability to interact with other banks of creators of the market, because here the goal for everything is simply to manage the positions of global currencies.

It is good to know that the broker or a dealer offers us the possibility of doing operations in such a way that prices generally change, as this is given according to the fact that liquidity can change in certain pairs, since it is important to keep in mind that investment bonds, banks, and if a broker or dealer are immersed in these details, it is good to know that brokers are usually compensated for their work, as it is a very interesting skill, since it is a risk to manage foreign exchange globally and these do, here we see reflected the net income, Sawps income and margin income, these in themselves are the conversations that are generated about the losses or what is more profitable for everything in itself, the earnings of doing Forex.

What can we say about the ECN Brokerage Model?

There is a very interesting detail and it is that an ECN simply has the ability to show the volume that is available to negotiate, because here it makes its offer, and it is a job of depends on the operator, because he has the knowledge about what maximum trade can be placed, because the ECN brokerage method is not really a variable used in equities, as they are two totally different terms, since it is relevant to comment that the OTC FX is somewhat similar to the ECN only that this It acts as an intermediary for certain markets or negotiating tables.

It should be noted that the ECN simply works as a method of differences which are determined by the difference between the best offer and the best offer at a specific time, it is important to know that each distributor tends to send a price to the ECN, and not only this because it also has the option of sending a certain amount of volume, as this is valid for the quote so that it can be distributed at this price to the customer, in addition the ECN volume is only shown as a reflection of what it has available, but not what the market is because this is where the market maker enters, since it has the ability to set the volume based on your comfort according to liquidity, as your responsibility is to provide a liquidity based on the conditions that clients consider favorable to do Forex, because it is good to know that the ECN also needs to be compensated with fees which are net charged Entity to the client, because this works as a kind of “bribe or refund” which is based on the amount of volume or flow of the daily orders, making the brokers can be classified as a broker or a dealer.

 Finally, it is good to make it clear that a broker or a dealer is simply a feasible broker when performing any Forex operation, since they work well based on clients.

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