Understanding the two main types of forex brokers—Dealing Desk (Market Makers) and No Dealing Desk (ECN/STP)—is essential for traders seeking the right trading conditions. Each broker type offers different pricing models, execution methods, and risk profiles. This article explores these two core categories, comparing their advantages, disadvantages, and how they impact your trading experience.

1. Dealing Desk Brokers (Market Makers)

Dealing Desk brokers, also known as market makers, create their own internal market by quoting bid and ask prices and executing trades directly from their own liquidity pool.

How They Work:

• Broker takes the opposite side of your trade
• Your trade doesn’t go to the interbank market
• Prices are generated by the broker, not directly from market depth

Key Characteristics:

Pros:

• Fixed spreads provide pricing stability
• Lower deposit requirements
• May offer guaranteed stop-loss orders

Cons:

• Possible price manipulation
• Slower execution during high volatility
• Conflict of interest in some models

Best For: Beginners or small accounts looking for stable spreads and lower starting capital.

2. No Dealing Desk Brokers (ECN/STP)

No Dealing Desk (NDD) brokers provide direct access to liquidity providers. They do not take the opposite side of your trade, instead routing it to external markets.

There are two main types:

A. ECN Brokers (Electronic Communication Network)

• Connect clients to a network of banks, hedge funds, and other traders
• Transparent order book with bid/ask matching

B. STP Brokers (Straight Through Processing)

• Automatically route orders to liquidity providers without manual intervention
• May aggregate prices from several providers

Key Characteristics:

Pros:

• True market pricing
• Low spreads (especially with Raw accounts)
• No conflict of interest

Cons:

• Commissions apply per trade
• May require larger deposits
• Spread can widen during low liquidity

Best For: Professional traders, scalpers, and high-volume accounts needing tight spreads and faster execution.

Comparison Table: Dealing Desk vs. No Dealing Desk

How to Choose the Right Type

• Choose Dealing Desk brokers if you want predictable spreads and a simplified trading experience.
• Choose ECN/STP brokers if you need raw spreads, high-speed execution, and minimal broker interference.

Key Takeaways

• Forex brokers are classified into two main types: Dealing Desk (Market Makers) and No Dealing Desk (ECN/STP)
• Dealing Desk brokers execute trades internally, offering fixed spreads and simplified onboarding
• No Dealing Desk brokers route trades directly to external liquidity, offering transparency and low-cost execution
• The right choice depends on your experience level, trading style, and capital size
• Always verify the broker’s execution model and regulation before registering

Frequently Asked Questions

What are the two types of forex brokers?

The two main types are Dealing Desk (Market Makers) and No Dealing Desk (ECN/STP) brokers.

What is a market maker forex broker?

A market maker broker internally executes trades, often taking the opposite side of your position with fixed or variable spreads.

What is an ECN forex broker?

An ECN broker provides access to a network of liquidity providers where orders are matched between buyers and sellers directly.

Which type of forex broker is better?

ECN/STP brokers are preferred by professionals for transparency and low spreads, while market makers are simpler for beginners.

Do ECN brokers charge commission?

Yes. ECN brokers typically charge a small per-lot commission in exchange for providing raw spreads.

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