2.9 Dealing Desk vs. No-Dealing-Desk Forex Brokers

 

Dealing desk and No Dealing Desk brokers have vast differences in the way they work. Not only that but under No-Dealing-Desk, the STP and ECN brokers also differ in their offerings. Let’s summarize the species in the easy-to-remember table below: 

 

Parameter

Dealing Desk Broker

No Dealing Desk - STP

No Dealing Desk – STP/ECN

Spread:

Spreads are usually fixed.

Spreads are usually variable.

May be (1) commission without spread, or (2) only spread without commission, or (3) both commission and spread.

Interface:

The counterparty to your trades.

A pipeline passing the orders to liquidity provider(s).

A pipeline passing the orders to liquidity provider(s) and other Interbank participants.

Quote basis:

Quotes by the broker, and may not be in sync with the ‘true’ market.

Quotes received from the liquidity provider(s).

Quotes received from the liquidity provider(s) and other market participants.

Order filling:

Orders may sometimes not get filled – risk of ‘re-quotes’ and ‘order slippage’.

Direct and automatic filling without any intervening ‘desk’.

Direct and automatic filling without any intervening ‘desk’.

Scalping*

Not allowed.

Generally allowed.

Generally allowed.

Spiking**

Known to ‘spike’ prices to trigger your stop orders, if it suits them.

Does not happen.

Does not happen.

 

Notes:

  • *Scalping - A popular method of trading involving the quick opening and liquidation of positions within seconds or minutes.

 

  • **Spiking – An unscrupulous practice whereby the broker sends out a fake spike in the price which will close out your position on a stop loss, rather than letting you ride a profitable position. 
 
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