Before we start, let’s look at the classification of trading platforms.
There are two types of foreign exchange trading platforms:
1. Dealing Desk (DD)2. No Dealing Desk (NDD) The NDD platform can be further subdivided into STP, DMA/STP and ESC+STP.
1. DD type of foreign exchange trading platform, also known as MM, namely market maker.
Usually a DD type forex trading platform has a Dealing Desk or processing Desk for processing orders and the type is set to fixed.
The market makers themselves profit from the spread and trade in the opposite direction from their clients when necessary.
As the name suggests, it is “market making” for customers.
This type of platform belongs to the “manufactured market”, where under certain conditions the market maker is always in the opposite position to the trader, and the “market maker” is always in the opposite way to the trader.
As a result, the spread on a market maker’s platform is usually fixed, so there will be much less risk.
It is important to emphasize that the license plate should not be used to determine whether a platform is a true bet.
2. As the name suggests, there is no Dealing Desk in a NDD type of foreign exchange trading platform, that is, there is no Dealing Desk.
Brokers do not trade with counterparties who are traders, but simply connect traders with the interbank market, so traders can trade directly at the level of the interbank FX market.
The NDD type of forex trading platform is a direct bridge between the two, so that individual traders have the opportunity to trade.
In addition, the real NDD FX trading platform does not require re-quoting and there is no unnecessary pause in confirming orders, so there are no restrictions when trading on news.
Generally speaking, the scale of individual traders’ transactions is too small to refer to foreign exchange transactions in the interbank foreign exchange market.
NDD foreign exchange trading platforms are divided into two types: STP and ECN+STP(1)STP Foreign Exchange trading platform STP Foreign exchange trading platform, namely, straight-through processing, where customers’ orders are directly sent to banks, and these liquidity providers can directly trade in the interbank foreign exchange trading market.
As traders on the STP platform, they can see the real time market price and execute the order immediately without the intervention of a dealing desk, which is a straight-through processing.
(2)ECN Foreign Exchange Trading platform ECN Foreign exchange trading platform, that is, electronic communication network.
This foreign exchange trading platform allows customers to interact with other customers.
In other words, a customer’s order can interact with the orders of other participants in the market.
The ECN forex trading platform provides a single market for all participants in the market.
In this market, all participants (banks, retail forex traders, hedge funds, brokers, etc.) become countertrades with each other by sending their competitive buy or sell quotes to the ECN system.
Orders for all trades will be matched in real time to one party in the opposite direction.
