DD and NDD Types of Forex Broker

Forex broker is a part that can be an institution, agent or individual where it stands to meet the seller and buyer party. It is for sure that the product that they sell is Forex / foreign exchange or we can say it as international currency. Broker in Forex trading can be divided into some different types. If you wanted to choose the right brokers, you have to understand about each broker and its function.

Below is the explanation that we will share about the various types of brokers in Forex trading?

1. DD / NDD Broker

Commonly, there are two main kinds of broker in Forex; the Dealing Desk (DD) and No Dealing Desk (NDD) broker. Sometimes, the DD broker is also called the market maker broker, meanwhile the NDD broker can be divided into some brokers such as the STP or Straight to Processing broker and the combination between STP and ECN or Electronic Communication Network.

DD Broker gets the profits from spread. We can say that this kind of broker creates a market and their own exchange value for the clients. Maybe you will thing a manipulation here in this system, but it was not. Market maker is still providing the sell and buys and they don’t care about which one that will be chosen by trader.

What makes this broker good is that usually they offer great facilities such as high leverage up to 1:1000, free of interest, small spread (sometimes it’s even fixed spread), interesting bonuses, up to the possibility of deposite and easy withdrawal through the third party. The lack of this broker is that this broker has a market maker. It means trader is not seeing the real rate foreign currency that is happened in the interbank market. Besides that, usually they are also taking an opposite position with the traders.

The example is that if you open the buy position of EUR/USD for 1 standard lot. To fulfill that order first DD broker will try to find the order sell in pair and with the same size from the other trader. By doing that way, they decrease the risk possibility. However, if there was not match order, so they will open the opposite position with you. Every forex broker may have the different risk management. It means that although you now that a broker is DD type, it is better to ask them whether they do it or not.

Meanwhile NDD Broker literally means “without passing through the dealing table”. This broker is a true bridge between trader and interbank market. Spread in NDD broker cannot be fixed because it is based on the market price and usually it is bigger than the DD spread. Furthermore, usually NDD broker is not fighting back the trader position. Besides those forex broker types, there is also other type. It is the hybrid type which is the combination between DD and NDD forex broker.

How to Choose the Right Forex Broker?

We knew that Forex broker has an important role in a forex trading. That is why; it is really essential to choose the right broker, whether from the facilities that are given and from the other aspects that we need. However, choosing the right broker is not easy. Why? It is because nowadays there are a lot of brokers that are available that offer many interesting things such as the deposit value, leverage and many more.

So, how to choose the right broker in a forex trading? Below are some tips that you can consider.

1. Choose a broker with a complete service based on your need

Every broker has its own rule, services and facility and it is different between one and each other. That is why; first of all you have to own the list of some brokers that serve the trading in your own country. Then, re-check for it by visiting their website. By doing that way, you can observe the services that are given and what offer that they give. After that, match it with your wants and needs.

2. Pay attention to the safety factor. Make sure that a broker has a legitimate permit

In choosing a forex broker, security factor is the most important thing that must be your main priority. By choosing good broker, it can guarantee your money and it is also a good step to avoid the bad broker to steal your money. For ensuring the security aspect of a broker, you need to check whether a broker own a permit or not from the related institution. Make sure that the related institution is legit and act as a regulator for many brokers in your country.

Furthermore, a legitimate broker usually will have a segregated account in which when we put our money there, our money will be not directly transferred to a broker’s account, but it is on the third party. It means that broker will be not having even a change to steal your money. You have to be careful with the illegal broker that is still operating and usually this kind of broker will offer a really competitive price and fare to attract a lot of clients for doing the trading forex with them.

3. Getting the recommendation from the person who you trust

The last tip is getting the recommendation from people that you trust who have ever deal with choosing the right broker. It can be the best advantage for you. You can ask your family, friends or joining the related forum about this thing.

Those are two main tips that you can follow and do to choose and get the right Forex broker. Joining a trading forex is a business that full of profit, but you must be paying attention in choosing the right Forex broker. It can give many advantages for you such as to protect your money and also to give you a lot of knowledge about Forex trading and everything about that thing.

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What You Need to Aware in Creating an Account in Forex Broker

Before doing the forex trading, Forex broker will offer you to make an account and the different transaction detail. In fact, there are some things that you need to aware and know about this. Below are some things that you need to pay attention.

1. Choose a Forex Broker with flexible initial deposit

A well known broker is usually offering big deposit for its clients, but usually it can be withdraw. You can choose a broker that offers a flexible regulation that can suit the capital with deposit’s requirements that are offered.

2. Offering easiness for deposit and withdraw

Choose a broker that has all the easiness in doing the deposit and withdrawal process. The insertion and withdrawal process should be able to do in only a day. That is why; please be careful with a broker that offer more than a day for that process, especially for a broker that offer a really long time for that process. It can be an indication that they use our money for the other activity.

3. the lowest spread, commission and swap

This point can determine the amount of profit and loss that we get when we do a forex trading. The example is that if a broker offers a commission of $50, spread of 5 pips ($50), so when we open a position we have to look for 10 pip profits ($100). It just for returning our capital and the rest is to look for the profit. Besides that, make sure that the swap is based on the rules.

4. Choose a broker that offer the most varied currency

In a forex trading, as much as options that can be traded, it is much better. It is an anticipation to play on the other market if a market is stalemate. The major currencies that are commonly used are EUR/USD, AUD/USD, USD/CHF, USD/CAD, USD/JPY and GBP/USD.

5. The best platform of METATRADER 4

Because we choose an online system, we have to choose a broker that provides a trading platform in the shape of METATRADER 4. Besides that, please make sure that it has good connectivity so it can avoid the off quotes or a condition when the platform is not working well.

6. Quick facility and Services and 24 Hours Online

Choose a forex broker that has good facilities and services, starting from the telephone, office, customer service, email, marketing contact and many other things. Please make sure that they also give 24 hours X 5 active days to give a help for their clients. It is better as well if a broker has skype, fax or chat facility so clients can ask for anything and at anytime.

7. Good Reputation and Popular

You can visit some forums, blogs or website that discusses more about forex broker because usually it is honest. Watch for the experiences from the other users and notice a popular forex broker with the best services and facilities. It can be your priority, so you will get the right broker. 

Some Important Forex Terms that You Need to Know

Forex Trading contains some terms that you need to know in order to make your activity is easier. Some essential terms in Forex Trading are like the forex broker, Real and Demo Account, leverage and many more. Below is the further explanation about each of those terms.

1. Demo Account and Real Account

Before doing the Forex Trading straightly, you can test the performance of a broker and its ability by using its demo account. This demo account is usually free. In this account, you can trade with the un-real money. It means that profit and loss will not make you lose your money or get the real money. If you felt that you are ready enough to do the real forex trading, you can start to open or create the real account. Usually you need to do some required deposit that will be used in a real buy and sell transaction where the profit that is gotten can be withdraw to your bank account.

2. Metatrader

The trading activity is done through software (special trading platform). Mostly the platform that is used is Metatrader or MT. The newest version is MT5, but the MT4 version is still good and stabile enough.

3. Technical Analysis

It is a way to decide the market movement by doing a study of the past data by using mathematic formula.

4. Fundamental Analysis

It is a way to decide the market movement by analyzing the politic and economic issues of a country. It is because those issues are taking a special role in moving or deciding the currency’s movement.

5. Pair

Pair is the currency pair that is traded. The example is EUR/USD which means the currency pair of Euro and US Dollar.

6. Lot

Lot is transaction unit in forex. The standard size of lot is $100,000. The mini lot is $10,000 and mikro lot is $1000.

7. Pips

Pips or Price Interest Points is a unit that is used to calculate the price change or we can say it as the profit and loss calculation.

8. Leverage

For every 1 transaction lot, trader must have at least $100,000. This is a huge amount and it can be a serious obstacle for the retail trader with limited fund. Leverage is leverage with the fraction of capital trader can use 1 lot.

9. Money Management

Money management is an important part that takes role for a trader’s succeed. Forex trading has a high risk and we need a management to manage that risk. The aim is to press and decrease the loss. Some factors that need to be considered in this money management are like the capital amount, account types, lot size, trading frequency and risk exposure.

10. Forex Broker

Forex broker is a company that acts as a connector between trader and world money market. Through this broker, trader can do the online buy and sell transaction. Broker is also a place where trader opens the trading account, sending the deposit, doing the buy and sell transaction and withdrawal.