What is Dealing Desk?

Hi,

Can somebody please describe what is dealing desk? It is good or bad to have broker that have dealing desk?

Thanks.

Hi Quicksilver,

1. Dealing desk = trading desk. So, basically, a dealing desk is a desk where buying or selling currencies occur. In this case, you are not the market makers. And most of the brokers that you know, such as FXCM, FxSol, GFT, etc. have a trading desk.


2. Imho, it is a bad thing if you're an active trader or scalper or news trader because during the news announcement, sometimes your order will not be filled out due to high volatilities. Moreover, some brokers are widening the spread during the news announcement. However, if you're a swing or long term trader, I think dealing desk is not really a big deal.

Hope this helps.

- SkYliNe -

My understanding of a "dealing desk" - In the old days a "dealing desk" was a huge office with many telephones to receive traders orders.

Todays, a dealing desk is a piece of software in the broker's computer that compares buyers against sellers in real time, and decides wether the broker should to buy or sell (according to the sum of the trades).

Thanks for your explaination.

Hi,

Thank you SKY,

I hear that trading desks are a very bad thing, - simply becuase they'll make their own call on how big of a spread to make you pay. of course during normal times they'll make it small, and then in the heat, - not only will they be slower, (when 20sec costs you a 50pips...) They will use their desk to make money for themselves not you.
As aposed to an ECN ?? or direct access broker- who just submits your order to the banks. -
but your spread is as varied as the market. -

I would like a final word on this myself.
DM


just keep an account open with a company like Fxcm for your swing trades - for the smaller spread?
*shrugs

What you just described above is a NON-Dealing Desk setup , ie a purely electronic trading system.

A deal desk is an office full of HUMANs making the judgement to accept, reject, requote your orders most notably during volatility (ie news). For example, on news you heard a BAD NFP number and went USD SHORT the very second you got the number; the broker's deal desk team will decide to accept or reject your short. Sometimes, it may take 1,2 or even 5 minutes to process your order either to accept or reject. They can take this much time to decide to even fill you at the peak price; ie, they can wait 5 minutes; they know that the market has reversed, they fill you at the highest price.


Deal Desk = 100% BAD to news traders.
But it does not do a crap against longer term traders.

However, I am hearing from other people that DEAL DESK brokers PAD your account with false (loosing) trades.

It is therefore best to keep complete record of your transactions for safety reasons....

Are you kidding?

If you are a swing trader (or holding onto a position longer than 5 minutes), an ECN will be better.

Sure they dont have fixed spreads like Retail Brokers like FXCM, but hell you can get way better spreads still. The non-fix spread only become a nightmare during volatility (ie during news time).

As an example, the best spreads for fix spread broker I've seen for EURUSD is 2 pips.... On ECNs, you can get as much as 0.5 pips spread... sometimes 0 spread even!

Therefore, all the more reason to go ECN even if you are a swing trader.

The disadvantage however is the capitalization... most ECNs will require at least 10K...

As some may know, there is a guy out of LA who has a blog on this subject, and an entire forum called the NDD Forum. I think you can just Google it.