What are the different types of Forex brokers?

The types of Forex brokers: ECN – STP – NDD – DD

Dealing Desk (DD)

A dealing desk broker is a market maker that typically offers fixed spreads and may elect to quote above or below actual market prices at any time. Market makers are always the counterparties of the trader, who does not trade directly with the liquidity providers. Market makers earn their income from spreads and typically take positions opposite those of their clients before covering themselves (or not) with liquidity providers.

No Dealing Desk (NDD)

An NDD Forex broker provides direct access to the interbank market; it can be an STP or STP+ECN broker. There is no price requoting, meaning you can trade during economic announcements without restrictions. The spreads are lower but not fixed, so they can increase significantly when volatility increases during major economic announcements. An NDD broker can either charge a commission on each trade or choose to increase the spread.

Straight-Through Processing (STP)

In STP mode, transactions are fully computerized and immediately processed on the interbank market without intervention.

Electronic Communication Network (ECN)

ECN brokers provide and display real-time order book information, including the processed orders and the prices offered by banks on the interbank market. They thereby improve market transparency by providing information to all market participants. ECN brokers usually make money by charging a commission on the traded volume. With ECN brokers, all transactions are directly processed on the interbank market in no-dealing desk mode.