What to Look for When Choosing a Forex Broker

As a beginner trader, the first and most important decision you'll make is which forex broker to use.

This is why you should always do your due diligence (“do yo DD”) and DYOR (do your own research).

Are you looking for a forex broker with a dealing desk？

Forex broker with no dealing desk？ What is a forex market maker broker？

If you've already started your own research into which forex broker to employ, you've most likely come across a slew of jargon and acronyms like DD, NDD, MM, STP, ECN, DMA, OTC, LP, and so on.

And you undoubtedly reacted with your own acronyms after seeing all of these acronyms, such as...OMG. WTF？

Don't worry if you haven't seen any of these acronyms yet; you will. You're bound to see them because they're all over the internet.

It is unavoidable.

When talking about forex brokers, a lot of technical language is used. Some of the information you read or hear is likely to be obsolete, erroneous, or even misleading.

You may have heard that there are two general types of retail forex brokers:

Shady

Non-Shady

Now, let's get serious. Let's give it another shot.

You may have heard that there are two sorts of retail forex brokers:

· Brokers who work on a Dealing Desk (DD)

· Brokers who do not have a dealing desk are known as No Dealing Desk (NDD) brokers.

Let's make a diagram:

But hold on! Not only that, but there's more!

Two “types” didn't seem to be enough for the retail forex industry's marketing team, so they decided to employ more acronyms in an attempt to further differentiate forex brokers and make them sound more sophisticated.

New labels were created for each type of broker:

Brokers who work on a Dealing Desk (DD)

· Brokers known as “Market Makers” (MM)

Brokers who do not have a dealing desk are known as No Dealing Desk (NDD) brokers.

· Brokers who specialize in “straight-through processing” (STP)

· Brokers of “Electronic Communication Network” (ECN) and “Straight-Through Processing” (STP)

Brokers who offer “Direct Market Access” and “Straight-Through Processing” (DMA/STP)

Here's how the “taxonomy” of retail forex brokers is commonly marketed:

WOW! Take a look at all those fancy abbreviations!

But there's a snag...

This isn't correct!

Here's how reality looks in real life:

There is only one “kind” of forex broker for retail traders, regardless of how they position themselves on their websites or sell their services.

What's more intriguing is that forex brokers aren't truly brokers!

Have you noticed that many so-called “forex brokers” don't mention the word “broker” on their websites？

(And for those who do, it's mostly for SEO purposes, to help their website rank higher in Google search results.)

What is the reason for this？

Because, technically, they aren't brokers at all!

There is no such thing as a retail forex “broker” in reality.

A misnomer is defined as a “wrong or erroneous name or designation.” Calling a forex broker a “broker” is a misnomer.

What is a “forex broker” if it isn't actually a broker？

While the image above gives you a hint, the answer is similar to the relationship status that some of you may have shown on Facebook in the past....

It's a difficult situation.

But don't be alarmed. Our purpose is to assist you in understanding what forex brokers are and how they work.

Let's start with a narrative to assist illustrate what a forex broker is.....