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Are you looking to start trading in forex? There are number of forex brokers across the world who have been offering trading platform to trade in currencies. This has been increased with increase in forex trading popularity.
Have you approached any forex broker for opening a trading account? If yes, you might have noticed that dealing desk brokers are lot more friendly and promise to give more bonuses like trading with mini or micro lots. In general the standard lot size to trade in forex market is $10,000.
This is where many people come to me asking why dealing desk brokers offer such perks compared to no dealing desk brokers. My answer is straight forward – when they are going to give away a lot that means they definitely going to gain more than they offer to you when you sign up with them. Is it not?
Dealing desk account is itself a source of profits for them. In order to reap those profits, they are offering few perks to lure you.
A dealing desk trading account is one that allows the broker to close the position later than you asked for. It means when you are dealing with dealing desk broker, the position will be closed later than you need (i.e.) there will be gap between the actual closing of the position which can cost you money. It will cost you money because during that gap before closing, the software used by the broker will show the “adjusted rate” that will be in favour of the broker instead for trader that is enough for a forex broker to open a doorway for making extra profit against the trader.
A dealing desk forex broker has its own trading platform that offsets your order. In other words, the dealing desk forex brokers are betting against you on other side of your currencies trade.
This is situation where the forex brokers win when you lose and they lose when you win. Hence they will hedge against the poor or newbie traders and tend to do quite well. For this reason they provide liquidity needed to get in and out of the positions when ever necessary.
As the dealing desk brokers bet against all the positions coming in their way, they don’t want you to take longer positions. The reason behind this could be the higher risk associated with longer trade.
At the same time you will have more slippage on your dealing desk trade. It is the difference between what the price is when you click to buy or sell the currency and what price you actually trade.
For this reason, one who is opting for dealing desk trading account must be careful enough during the market movements because when your order is approaching stop loss, the dealing desk forex broker will increase the spread and push the market towards your stop loss price. When your trade triggers stop loss, they will make profits and make profits out of your money. |
