A foreign exchange dealer is a company or an individual who buys or sells foreign bills of exchange.
Traders use their own funds to buy and sell bills and obtain bid-ask spreads.
Foreign exchange dealers are mostly trust companies, banks and other part-time institutions, but also specialized in the business of companies and individuals.
A DD dealer usually has a Dealing Desk that processes orders and sets the type to fixed.
Market makers themselves make money on spreads and, when needed, trade in the opposite direction to their clients, by definition “making markets” for them.
This type of platform belongs to the “manufacturing market”. Under certain conditions, the market maker will always be in the opposite position to the trader and “make the market” by the way of the opposite position to the trader. Therefore, the spread of the market maker platform is generally fixed, so the risk will be much smaller.
As the name implies, there is no DealingDesk, or processing platform, where brokers do not trade with each other as traders, but only as a link between traders and the interbank market, so that traders can trade directly at the level of the interbank forex market.
NDD’s FX dealers act as a bridge, directly linking the two and giving individual traders the opportunity to trade.
And a true NDD forex dealer will not require a re-quote, nor will there be an unnecessary pause in order confirmation, so there will be no restrictions when trading on news.
In general, however, individual traders are too small to refer to foreign exchange transactions in the interbank foreign exchange market.
NDD forex dealers are divided into two types, one is STP, the other is ECN+STP (1) STP, or Straight Through ProcessingSTP, the customer’s order is sent directly to the bank,
These liquidity providers are able to trade directly in the interbank foreign exchange market.
The dealing person on the STP platform, on the other hand, can see the real time market price and execute the order immediately without the intervention of the dealing Desk, which is the meaning of Straight Through Processing.
For example, TeraFX holds the full license of STP, the highest security level of FCA.
(2) ECN (Electronic Communications NetworkECN) is a foreign exchange dealer that allows customers to interact with other customers. In other words, customers’ orders can interact with those of other participants in the market.
ECN forex dealers provide a market for participants (banks, retail forex traders, hedge funds, brokers, etc.) to trade against each other by sending competitive buy or sell quotes to the ECN system.
Orders for all transactions will be matched in real time by a party in the opposite direction.
