How to tell if your broker is a dealing desk or a non-trading desk

• How to tell if your broker is a dealing desk (DD) or a non-trading desk (N-DD), especially when all the dealing desk brokers claim they are not dealing desks?

Most traders don’t realize that their success in the forex markets depends on their sponsoring broker. There is an “artificial market” that has been being created and totally controlled by most of the very good branded brokers who claim they don’t trade. Many of us who trade through, for example, FXCM, IBFX, FXDD, FXSol, Gain Capital, Investtechfx, Alpari and many more, are trading on the Artificial Market. Due to the broker’s full control over every transaction traded in the “Artificial Market”, the odds are against us more than playing blackjack in the casino. Imagine, the dealer/broker can not only see that his hand beats yours as well and if he doesn’t like his cards, he can draw another once in a while. Find a broker that offers “low leverage”, brokers that offer 300:1 or 500:1 leverage have a “unique business model” – they transfer money from clients’ accounts into their own pockets, they are not there to look after your interest you need to remember that the dealing desk is there to trade against you they sell you when you buy and buy when you sell they give the impression you are trading with “interbank” but actually the orders end in a operating table of the Corridor. Dealing desk brokers DO NOT like or even ALLOW scalping in trades.
 
DD Brokers increase fees for trading when it suits their purposes.

Now listen to this very carefully:

DD Brokers “UPRATE” up to 10-20 pips on routine bases to complete “out of balance” trades, leverage your own account or meet immediate liquidity requirements. I hope one day the NFA or FSA will start charging those “brand name” brokers for manipulating rates for their own benefit and stealing their traders’ accounts.

Red Flags Negotiation Table A

1. “Resellers” are not welcome or charge a resale FEE

2. Offering SPREAD FIX and/or LOW SPREAD (0.5pip, 1pip…)

3. Delayed execution of your ORDER

4. Offer leverage 300:1, 400:1 even 500:1

5. Slippage when closing a positive trade

6. Limitation of Stop Loss to 10 or 15 pips
 
ADVANTAGES OF THE TABLE WITHOUT DELIVERY

1. No inherent conflict of interest. NDD brokerage firms do not trade against their clients. As trading facilitators, they do not take positions that, from time to time, may conflict with the interests of individual traders.

2. Market access. NDD STP (straight through processing) brokers offer all merchants, regardless of their size, equal access to the interbank market. Rates (bid and ask prices) are not set by an individual broker, but are derived from active trading between participating banks, institutional investors, FCMs and individual traders. The process itself turns every trader, regardless of their size, into an independent market maker.

3. Anonymity – Trading is done in full anonymity – the NDD broker does not know or need to know your positions, so stop loss orders are not/cannot be removed when a broker needs to comply of liquidity.

Price intervention (Bias). NDD broker rates, as well as buy and sell prices, come directly from the interbank system. They are not filtered or otherwise manipulated to maintain set (undisclosed) profit margins or increased by the broker for trading advantage.

Transparency. No games. No cheats. What you see is what you get, dollar for dollar – Straight Through Processing (STP)

Spreads are variable, not fixed. Forex is an extremely liquid market. Spreads are in a constant state of flux and when traders trade via a non-STP trading desk, their tickets are cleared via the BBO Best Bank Offer model.

During peak trading hours, spreads can drop to zero, a fact that most traders who use a dealing desk are not aware of. During off-peak hours, spreads can be considerably higher.

Straight Processing/No Dealing Desk Brokers do not offer or execute trades based on fixed spreads. They charge a nominal transaction fee. This is not the case with the operating table runner. Whether the interbank spreads are high or low, they simply increase their rates to guarantee the profits they have imputed into their fixed spreads. They also generate an undisclosed amount of income by trading against their merchant clients.