Which Forex Broker is Better? – The Dealing Desk or The Non Dealing Desk?

Whether to go for a broker or not? What kind of broker to use? These are some basic questions that you need to ask yourself because you begin trading in the market. Also, these questions might determine the structure of your trade. Basically, you can go for a Dealing desk broker or a Non Dealing Desk broker. Both of these kinds are explained elaborately, as follows –

• Dealing Desk Forex Brokers – The main thing to know about these brokers is that they come with a caveat emptor tag attached to their forehead. These brokers have the means and opportunity to wipe out entire profits of their clients. If you decide on these brokers, you might end up taking a huge risk because there have been cases where brokers have refused to pay any profit to their customers. They are also found to be engaged in frauds and malpractices. Although, these brokers were the standard to forex trading earlier, now they have been repeatedly associated with cases of false price et al.

Another problem with dealing desk brokers emerges during meltdown. This is the time when thousands of orders keep coming in and the broker needs to approve every order manually. This may lead to large scale losses because by the time your turn comes and your order gets filled, you might have already lost a lot.

So, if you go for a dealing desk broker, please investigate properly before investing.

• No Dealing Desk Forex Brokers – This is in complete contrast to the dealing desk broker because here, everything is completely automated and instantaneous. Orders are matched automatically and in real time and losses due to untimely finalizations are minimal. The main benefit of this type is its transparency.

Even though the no dealing desk alternative seems better, you cannot stereotype dealing desk brokers to be all corrupted and fraudulent. Because there have been a few cases does not mean that all the mangoes are rotten. If you want to go for this option, there are agencies like FSA (Financial Services Authority) and CFTC (Commodity Futures trading Commission) which can help you in verifying the credentials of the brokers, before you get into trade with him. Even Non ECN brokers have the facilities to follow automated trading and you can get in touch with such facilities.

However, because the ECN brokers are becoming the preferred option for traders all over, this discussion shall become pointless. ECN brokers will bring a stability, automation and transparency to the Forex trading industry.