
Characteristics of dealing desk
Brokers with a dealer desk are frequently used to serve retail clients trading tiny or micro lots. As previously stated, these brokers have access to liquidity providers and market makers. However, they do not pass on the cost to the customer. Because they do not charge a commission, they make their money by raising the price.
The markup works if the client trades in sufficient volume for the broker to execute directly on a market maker's price. If a client wishes to trade ten units, the broker will seek the best possible price from its network of market makers. That is, it will simply reduce the bid price while increasing the asking price. If the best quote it receives is 1.2565/1.2575, it may only quote 1.2560/1.2580. By matching the client's trades, it is possible to generate a small profit in pips on a larger volume trade.
Larger clients can contact some dealing desk brokers directly, allowing for more market interaction. Essentially, the client does not feel alone and believes that someone is on the other side of the screen. Some dealing desk brokers provide more personalised service, assisting customers in resolving problems or answering questions.
The markup works if the client trades in sufficient volume for the broker to execute directly on a market maker's price. If a client wishes to trade ten units, the broker will seek the best possible price from its network of market makers. That is, it will simply reduce the bid price while increasing the asking price. If the best quote it receives is 1.2565/1.2575, it may only quote 1.2560/1.2580. By matching the client's trades, it is possible to generate a small profit in pips on a larger volume trade.
Larger clients can contact some dealing desk brokers directly, allowing for more market interaction. Essentially, the client does not feel alone and believes that someone is on the other side of the screen. Some dealing desk brokers provide more personalised service, assisting customers in resolving problems or answering questions.
A dealing desk is a type of forex broker operation where the broker acts as the counterparty to clients’ trades. One key characteristic is that orders are filled internally rather than being sent directly to the interbank market. This allows dealing desk brokers to offer fixed spreads and instant trade execution, even during volatile market conditions. They may take the opposite position of a client’s trade, which can lead to potential conflicts of interest. Dealing desks often offer lower minimum deposit requirements and leverage options suitable for small traders. While they provide stable pricing and fast execution, traders should be aware that prices are determined by the broker and may differ slightly from real market rates.
Jul 29, 2022 05:29