Before choosing which Forex brokers are best for you, you must first outline what is good for you. You must first create the criteria and then see what Forex brokers out there are offering traders.
You know what you like so it makes sense for you to write down a list of things you want. If you decide you want phone applications and that sort of stuff, you have to cross out Forex brokers who have no way of providing this service.
Picking A Forex Broker comes down to what the trader desires.
There are different types of Forex brokers. There are Dealing Desks and Forex brokers with no Dealing Desks. Dealing Desk Forex brokers are known as Market Makers. Other Forex Brokers are "middlemen" in some senses.
What Is A Dealing Desk?
These types of Forex brokers make money from the spread and by trading against their clients. What these Forex brokers do is create a market exchange rate for their clients. Because Market Makers control prices, they are very easily able to set certified spreads.
These clients of dealing desk Forex brokers don't see the real interbank market rates. What actually happens is as followed, a trader makes a trade, sent to the dealing desk. Your winning trades are offset by matching them with other clients or they are then passed on to a liquidity provider.
Losing trades are counter-traded by the Forex brokers and then become their profits.
If you wanted to buy a particular currency but the broker had no one else in their clients to sell, they would take the opposing position against you.
What Is No Dealing Desk?
No Dealing Desk Forex brokers don't pass their clients' orders on. This means that they do not take the other side of their clients' trade as they simply link two parties together. These types of Forex brokers build bridges. They build a structure which connects two areas, you and another client who wants the opposite trade.
These brokers usually add a bit to the spread.