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Dealing Desk - what does it mean

  • #1
  • First Post: Aug 29, 2007 1:39pm Aug 29, 2007 1:39pm
Hi everyone,

Could anyone share what's the meaning & purpose of a dealing desk ? Especially when brokers mean no dealing desk.

Thanks.
Mike
  • #2
  • Aug 29, 2007 2:55pm Aug 29, 2007 2:55pm
The virtues of a dealing desk and non-dealing desk have been debated on this forum at length. Quite simply, a NDD is a brokerage arrangement where the broker passes your trade on to "the market" rather than taking the other side of your position as is typically done in a dealing desk arrangement. Most NDD arrangements simply pass your trade to a larger broker or liquidity provider who then takes the other side. Even in the dealing desk environment there is rarely a human examining your mini-lot(s) to see what he can squeeze out of you.

The simple facts are that someone always takes the other side of your positon. That's why it's called trading. There is a common belief among some (and they will be here shortly) that brokers will manipulate prices to give you a less than equitable deal if they are on the other side. In my experience, many of those people have yet to examine to root cause of their trading failures and have chosen to focus their search externally for their answers. It's a phase most all of us go through.
  • #3
  • Aug 29, 2007 9:59pm Aug 29, 2007 9:59pm
Quoting philmcgrew
The virtues of a dealing desk and non-dealing desk have been debated on this forum at length. Quite simply, a NDD is a brokerage arrangement where the broker passes your trade on to "the market" rather than taking the other side of your position as is typically done in a dealing desk arrangement. Most NDD arrangements simply pass your trade to a larger broker or liquidity provider who then takes the other side. Even in the dealing desk environment there is rarely a human examining your mini-lot(s) to see what he can squeeze out of you.

The simple facts are that someone always takes the other side of your positon. That's why it's called trading. There is a common belief among some (and they will be here shortly) that brokers will manipulate prices to give you a less than equitable deal if they are on the other side. In my experience, many of those people have yet to examine to root cause of their trading failures and have chosen to focus their search externally for their answers. It's a phase most all of us go through.
Thanks Phil.
  • #4
  • Aug 29, 2007 11:27pm Aug 29, 2007 11:27pm
Quoting mikewong
Hi everyone,

Could anyone share what's the meaning & purpose of a dealing desk ? Especially when brokers mean no dealing desk.

Thanks.
Mike
The basic difference is simple. When you work with a dealing desk, they exhibit price control and 100% order information of their customers, which allows them to manipulate quotes to sweep their customer stops that are in-range. On a non-dealing desk platform, there is no human intervention nor price control, which means that concepts such as stop sweeping, requoting, etc. are non-existent. Do you want to trade against the "house" or do you want to trade against the market? The difference is huge.
FXChant Singing the World of Forex
  • #5
  • Sep 1, 2007 4:48am Sep 1, 2007 4:48am
Quoting fxchant
The basic difference is simple. When you work with a dealing desk, they exhibit price control and 100% order information of their customers, which allows them to manipulate quotes to sweep their customer stops that are in-range. On a non-dealing desk platform, there is no human intervention nor price control, which means that concepts such as stop sweeping, requoting, etc. are non-existent. Do you want to trade against the "house" or do you want to trade against the market? The difference is huge.
Wow. This forum is great!

FXChant,

That means in a dealing desk environment, you're at the mercy of the market maker's quotes while in a non-dealing desk , you are actually trading with market rates (of course , they add in the spread which is their revenue)


Once again thanks Phil and FXchant!
  • #6
  • Sep 1, 2007 10:05am Sep 1, 2007 10:05am
Quoting mikewong
Hi everyone,

Could anyone share what's the meaning & purpose of a dealing desk ? Especially when brokers mean no dealing desk.

Thanks.
Mike
The stickys at the top of this thread are very well written and provide much in depth info. Required reading!
  • #7
  • Sep 1, 2007 11:19am Sep 1, 2007 11:19am
Quoting mikewong
That means in a dealing desk environment, you're at the mercy of the market maker's quotes while in a non-dealing desk , you are actually trading with market rates (of course , they add in the spread which is their revenue)
Nothing could be further from the truth. It doesn't matter to me what you chose but don't do it for the wrong reasons.

A "market" is made by someone who trades against you and presumably has more capital than you. Someone always takes the other side of your trade. In a dealing desk environment it is your broker. In a non-dealing environment it is usually a liquidity provider who is simply a bigger broker. Your mini lot isn't going to show up at Bank of America. Please get it out of your head that one is more devious than the other. The difference between getting screwed and getting screwed once removed is minimal.

"Market Rates" are the prices your broker shows you. There is no global market for you to participate in. You are trading in a localized pool. Assuming that you use a relatively larger and reputable broker, your broker's quotes will most likely mirror those of all brokers. I have plotted quotes from dealing and non-dealing brokers and they track each other very well. If one is a pip different then so be it. It all comes out in the was as they say. Sometimes, you'll get a pip worse and sometimes you'll get a pip better. Your broker doesn't maintain a team of executives sitting around trying to guess what your next move will be and in which way they should manipulate the market.

Regarding the "spread" you should know that NDD brokers charge a variable spread and when the market starts moving that spread generally widens to rightfully reflect the increased uncertainty in the market. It's not uncommon to see double digit spreads from them in times of tumultuous trading. Not only does that spread make it dificult to enter the market but if you're already in you could be taken out. Every broker makes money and that is their right. Some have fixed spreads and some variable ones. Thinking that one model has your best interests in mind would be a mistake.
  • #8
  • Feb 8, 2015 2:35am Feb 8, 2015 2:35am
DEFINITION of 'No Dealing Desk'
A way of forex trading that provides immediate access to the interbank market. The interbank market is where foreign currencies are traded. This is different than trading through the dealing desks that are found in many banks and financial institutions. By using a dealing desk, a forex broker who is registered as a Futures Commission Merchant (FCM) and Retail Foreign Exchange Dealer (RFED) can offset trades. If a no dealing desk system is used, positions are automatically offset and then transmitted directly to the interbank.

INVESTOPEDIA EXPLAINS 'No Dealing Desk'
Forex brokers who use this system work directly with market liquidity providers. When trading through a no dealing desk, instead of dealing with one liquidity provider, an investor is dealing with numerous providers in order to get the most competitive bid and ask prices. An investor using this method has access to instantly executable rates.

Quote from Investopedia.com
  • #9
  • Feb 8, 2015 2:46am Feb 8, 2015 2:46am
Quoting Deevog
DEFINITION of 'No Dealing Desk' A way of forex trading that provides immediate access to the interbank market. The interbank market is where foreign currencies are traded. This is different than trading through the dealing desks that are found in many banks and financial institutions. By using a dealing desk, a forex broker who is registered as a Futures Commission Merchant (FCM) and Retail Foreign Exchange Dealer (RFED) can offset trades. If a no dealing desk system is used, positions are automatically offset and then transmitted directly to the...
your like 8yrs to late
  • #10
  • Feb 13, 2015 6:04am Feb 13, 2015 6:04am
Quoting mikewong
{quote} Thanks Phil.
Thank you for this explanation. So many beginner traders are concentrating on this instead of finding the right strategy that will work for them and studying market conditions.
I have passed this phase and I guess you are right everybody have to go through it ..
Now I am on mission to find suitable broker that will offer me best promotions so that at least partially I can rely on their bonuses and protect my own capital.
  • #11
  • Last Post: Feb 13, 2015 6:47am Feb 13, 2015 6:47am
Quoting bullandbear2
{quote} Thank you for this explanation. So many beginner traders are concentrating on this instead of finding the right strategy that will work for them and studying market conditions. I have passed this phase and I guess you are right everybody have to go through it .. Now I am on mission to find suitable broker that will offer me best promotions so that at least partially I can rely on their bonuses and protect my own capital.
Good luck! And remember only the best brokers offer bonuses
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