Hello,
I have been looking to signup with an ECN to avoid dealing desks.
Can someone explain how a counter-party differs from a dealing desk.
As stated in the contract... (removed broker to avoid bias feedback)
"THE FOREIGN CURRENCY TRADING YOU ARE ENTERING INTO IS NOT CONDUCTED ON AN EXCHANGE. BROKER IS ACTING AS A COUTNERPARTY IN THESE TRANSACTIONS AND, THEREFORE, ACTS AS THE BUYER WHEN YOU SELL AND THE SELLER WHEN YOU BUY. THE PRICES BROKER OFFERS MIGHT NOT BE THE BEST PRICES AVAILABLE.
ALTHOUGH BROKER IS THE COUNTERPARTY TO EACH OF YOUR TRADES, BROKER LIMITS RISK TO ITSELF BY INSTANTANEOUSLY OFFSETTING THE TRADES AND POSITIONS IT ENTERS INTO WITH YOU WITH A BANK OR INSTITUTIONAL MARKET MAKER. AS A RESULT, BROKER DOES NOT PROFIT WHEN YOU LOSE MONEY ON A TRADE. RATHER, BROKER EARNS COMMISSIONS ON EACH TRADE IT ENTERS INTO WITH YOU."
How does this differ form a dealing desk? This said broker claims no dealing desk.
What risks to the broker are being limited? Maybe I am not understanding the concept of a counter-party.
Thank You
I have been looking to signup with an ECN to avoid dealing desks.
Can someone explain how a counter-party differs from a dealing desk.
As stated in the contract... (removed broker to avoid bias feedback)
"THE FOREIGN CURRENCY TRADING YOU ARE ENTERING INTO IS NOT CONDUCTED ON AN EXCHANGE. BROKER IS ACTING AS A COUTNERPARTY IN THESE TRANSACTIONS AND, THEREFORE, ACTS AS THE BUYER WHEN YOU SELL AND THE SELLER WHEN YOU BUY. THE PRICES BROKER OFFERS MIGHT NOT BE THE BEST PRICES AVAILABLE.
ALTHOUGH BROKER IS THE COUNTERPARTY TO EACH OF YOUR TRADES, BROKER LIMITS RISK TO ITSELF BY INSTANTANEOUSLY OFFSETTING THE TRADES AND POSITIONS IT ENTERS INTO WITH YOU WITH A BANK OR INSTITUTIONAL MARKET MAKER. AS A RESULT, BROKER DOES NOT PROFIT WHEN YOU LOSE MONEY ON A TRADE. RATHER, BROKER EARNS COMMISSIONS ON EACH TRADE IT ENTERS INTO WITH YOU."
How does this differ form a dealing desk? This said broker claims no dealing desk.
What risks to the broker are being limited? Maybe I am not understanding the concept of a counter-party.
Thank You