Unfortunately, many people wrongfully associate Forex trading with a scam.
The problem lies in the increasing number of unscrupulous companies marketing false info. The number of Forex-related scams has significantly increased over the past few years, so it’s important for you to be able to identify a hoax. After all, Forex trading should be a potentially profitable experience.
When choosing a broker, always check if they are regulated by a relevant authority.
Simply put, if a broker is not regulated, your money is not safe. Every broker should abide by the rules of a financial authority. In the context of defending citizens from fraud, many countries have established private or state organisations to regulate the Forex market. Generally speaking, these organisations are actively supported by the government.
The top three countries with the most rigorous regulators are:
Choosing a broker is the very first step you need to take to be able to enjoy your trading experience. But many people don’t know the differences that exist within the range of fully regulated brokers. Let me explain in the simplest way possible.
Types of Brokers
Generally speaking there are DD (Dealing Desk) brokers and NDD (Non-Dealing Desk). NDD brokers include:
We usually refer to DD brokers as market makers. The infamous term “market makers” is used because these brokers usually take the opposite side of traders trades. They make money through spreads and by providing liquidity. They also try to find a matching long or short order from their other clients before taking a countertrade or passing it on to a liquidity provider. They are known to offer artificial quotes, and orders are filled on a discretionary basis.
Contrary to DD brokers, Non-Dealing Desk brokers don’t pass their orders to a market maker or liquidity provider. They use both the STP and ECN technologies without a dealing desk and route clients’ trade orders directly to liquidity providers. It allows clients to access real markets with better and faster fills. It is a bridge between clients and liquidity providers, and there are no requotes when an order needs to be filled. We differentiate between two types of NDD brokers: STP and ECN.