Brokers offer a very valuable service by enabling even the smallest investor to have access to the FOREX market. Most Forex brokers operate through a Dealing Desk (DD) and earn money through spreads and by providing liquidity to their clients. Also known as “market makers,” Dealing Desk brokers create a competition for their clients, meaning they often take the other side of a client’s trade. Naturally, you may think that this creates a conflict of interest, however, it doesn’t. These brokers provide both a sell and buy quote, which means that they are filling both buy and sell orders of their clients; they are indifferent to the decisions of an individual trader.
Since market makers create the prices at which orders are filled, this leaves very little risk for them to set FIXED spreads. Their revenue is not from commission on each trade. Rather, they make a profit on the spread between the bid and ask price. They offer a fixed spread, which can sometimes be beneficial to the trader when the market is volatile.
No Dealing Desk
No Dealing Desk execution is the most direct and transparent way to carry out your trades. Forex providers who use this system work directly with market liquidity providers. A trader using this method has access to real time executable rates. When you trade through a no dealing desk, instead of dealing with one liquidity provider, you deal with numerous providers in order to get the most competitive bid and ask prices.