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Dealing Desk or Non-Dealing Desk broker

Discussion in 'General Forex Talk' started by amirkhan, Dec 9, 2009.

  1. amirkhan

    amirkhan Recruit

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    Can anyone please tell me in detail what is difference between " Dealing Desk or Non-Dealing Desk broker "

    Thanks
     
  2. Pharaoh

    Pharaoh Colonel

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    Technically, a Dealing Desk means that someone or something executes your trades rather than sending them straight to the market. This means that your broker is (at least temporarily) taking the opposite side of the trade and thus may have a vested financial interest in wanting you to lose.

    Another issue is that some brokers play word games with terms like DD, NDD, STP, and ECN. I know of at least one broker with an electronic Dealing Desk that claims they are ECN, because there are some electronics involved in processing the order.
     
  3. mKat

    mKat Recruit

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    Who are they? I've seen this crap too. I finally had it out with a dude at CMS who told me the whole story. He said that many ECN brokers actually provide no more security than those with a dealing desk.

    Furthermore the STP models used by dealing desks are, in my opinion, just a way for dealers to look more like ECN's because people think ECN = honest.

    Reading the fine print on your contract with your broker sheds a lot of light on this subject.


    To the OP: My colleagues and I have been doing a ton of research on brokers lately and quite honestly there are positives and negatives to both. What's appearing to be more important is who regulates the institution. Unfortunately most regulatory bodies have little power over what's in the fine print of your contract so ultimately you need to know what each broker is demanding when you get set up with them. I would say though, that institutions that are subdivisions of banks are usually much more secure and will be subject to stricter regulation if not by law, by reputation. SwissPB is and example of a true ECN broker in the Swiss financial scene that is is also a full-blown bank. I would love to trade with them (they also offer MT4) but due to their strict rules their spreads are unreasonable on many of my favorite pairs.

    I can wander over to FXCM who have a less than perfect track-record and literally the spreads are cut in half comparied to SwissPB. But do I feel safe dealing with a company like that? (BTW my colleagues are all currently FXCM clients so I'm not trying to dog them specifically).

    My point is, if you are a scalper and dealing with less than 100k, you should take a hard look at some of the more reputable dealing desk brokers. Furthermore, they often will negotiate lower spreads based on account size, volume, and trade frequency.
     
    #3 mKat, Dec 11, 2009
    Last edited: Dec 11, 2009
  4. cowmadagan

    cowmadagan Sergeant

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    Pharaoh, ECN and STP aren't in the glossary.
    Here's a link for what they are.
     
    #4 cowmadagan, Jan 5, 2010
    Last edited: Jan 5, 2010
  5. jtfx

    jtfx Private, 1st Class

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    All these ECN, STP, NDD offered by Market Makers are just sugar coating to lure you in.

    FXCM offered NDD, yet after several friend claims they are getting 2-5 seconds execution time...

    Some brokers would claim ECN and requires only $500 to open an account... But I wont be surprised one day, market makers would impose $10K~$20K to open an "ECN" account only to get 5-10 seconds execution time - as thats the time it takes the deal desk to execute it.
     
  6. Jason Rogers

    Jason Rogers FXCM Representative

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    Two things can affect the execution time on NDD: latency and the number of times the order attempts to execute the trade. Latency is fairly straightforward and can be measured by a trace route. If the order is rejected by one bank and has to be sent to another for execution, then that also affects trade execution time. So the available liquidity and order rejection is also very important.
     
  7. jtfx

    jtfx Private, 1st Class

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    I believe some brokers claim to be STP/NDD but had an external office that handles the actual dealing.

    Also, be noted of Virtual Deal Desk plugins..
     

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