What types of forex brokers exist? What is the difference between A-Book and B-Book brokers?

A B-Book license grants the broker the right to fill the orders of their clients within the system. Of course, a license means the broker is controlled by a regulatory body. Usually there is no need to close a Forex trading account, since you don’t have any obligations towards it.

Straight-Through Processing brokerage firms are also known as Direct Market Access brokers. These brokers give their traders direct access to the interbank FX market, where pricing and execution is done by the big banks acting as the liquidity providers. Their product offering is tailored mostly to professional traders who have the experience and liquidity to match the large volumes of trade that are performed at the interbank level.

Some offer legitimate services while others are illegal and deceptive. Some are regulated by official regulation bodies while others can do pretty much whatever they want. Most traders don’t take the time to understand the difference between them in order to choose the best forex brokers, and can therefore be fooled into making unwise choices regarding their trades and investments. Most retail traders in the forex market will be working with the class of brokers that are known as dealing desk brokers or market makers. These types of brokers are named market makers because they “make the market” for the retail traders.


Forex brokers are broadly categorized as Dealing Desk and No Dealing Desk Brokers. Dealing Desk brokers are also known as Market Makers while No Dealing Desk are further categorized as Straight through Processing – STP brokers and Electronic Communication Network – ECN brokers. Another thing about Straight through processing is that you’re unlikely to trade in Nano lots. You tend to have variable spreads when there is major news releases. While the image earlier provides a hint, the answer to this question is like the relationship status that some of you all might’ve displayed on Facebook in the past….

forex broker types

That is why there are various types of brokerages in the FX market. DMA accounts also transfer order information directly to liquidity providers. A forex trader can buy or sell the currencies through the trading software / platform provided by a forex broker.


Theoretically, an A-Book broker can STP clients’ orders to a B-Book broker. Frankly, whether a broker is considered an A-Book or B-book broker is not the be-all and end-all. What matters most is the integrity of the broker and how they operate. Flexible deposit and withdrawal options make it easy to manage your account. Now that you know all the types of brokers available, you should be able to make the right decisions. Fear of trades manipulations by brokers is not enough reason to choose an ECN broker.

forex broker types

Investors trade in the forex markets as a hedge against international currency and interest rate risk, as a means to speculate on geopolitical events, and to diversify their portfolios, among other reasons. Investors should seek out a broker that offers reasonable fees, a user-friendly interface, exceptional customer service, and a breadth of offerings. CMC Market is our top pick, but your needs may be better-suited by another forex broker on our list. Unlike most brokers on this list, IG does accept U.S. forex traders, which has been the case since early 2019 when the company re-entered the U.S. market. This term dealing desk derives from good old fashioned offline trading, when financial institutions actually had a desk where the traders would sit and manage the institution’s investments.

What is forex trading

If you can only afford a $500 account, don’t choose a broker with a $1,000 minimum deposit. In the same vein, a broker that cannot accept your $500,000 account may be too small for you. The system allows you to trade by yourself or copy successful traders from all across the globe. Like the ECNs, the MTFs only link market participants irrespective of their status .

Some brokers will provide you with market data and give you advice on the products you want to buy or sell – depending on whether they are a full service broker, or execution only. However, a broker must be licensed to give advice and execute the sale, and they will only perform trades on your behalf once you have given them the go-ahead. As opposed to using an external price feed to conduct internal order execution, some brokers use an automated dealing desk and generate their own quotes. An algorithm will review each new order and decide how to proceed.

  • No dealing desk broker is not the counter party in any transaction while connecting the traders / liquidity providers for the sake of trading.
  • Our Electronic money institutions are Neteller and Skrill authorized by FCA of the United Kingdom and Cardpay authorized by Central Bank of Cyprus.
  • And to help explain what a forex broker is, let’s start with a story…..
  • It takes sometimes from a few hours to a couple of days to be up and running – it depends mostly on the ID verification process and the funding method used to deposit funds.
  • However, interbank liquidity providers are always included in the ECN engine too as self-traders themselves would not create enough market liquidity.
  • NDD STP brokers usually have many liquidity providers, with each provider quoting its own bid and ask price.

Not all brokers are regulated, however, and traders should be wary of unregulated firms. You should still always check out an STP broker’s risk management policy to learn about their exact practices. While this might sounds like the simplest solution for a Forex trader , it does require a much higher investment capital as most parties in the interbank market only trade very large lots. Therefore, ECN brokers can require minimum account sizes in the ranges of $1K – $50K. It’s worth considering that the broker’s price rates might vary from the price rates quoted in the interbank market due to their inventory management interests.