Choosing a Forex broker impacts not only how comfortable your trading experience is, but also how profitable it will be. Even the strongest strategies can fail miserably if you’re working with an untrustworthy broker.
The modern Forex market is still relatively young. In its early days, especially as it expanded across the internet, a wave of scam companies emerged. Over time, the number of them has decreased, and today, the market is mostly made up of reliable, time-tested brokers.
Still, not all brokers are the same. Some dishonest companies have grown so large and polished that it can be hard to believe they’re not legitimate.
All financial companies offering brokerage services in the Forex market can generally be classified into several categories.
1. Dealing Desk (DD) or Dealing CenterIf you end up working with a dealing center, chances are things won’t go well. The truth is, dealing centers aren’t true brokers. All trading takes place inside the company: no money is sent to the market, and no actual currency is bought or sold.
Trades are processed between clients, which leads to wider spreads and frequent requotes. If a client wishes to sell currency and there’s no matching buy order, the dealing center has to step in and take the trade itself.
This creates a conflict of interest—the company benefits when you lose, which, in turn, means it’s financially motivated to work against you.
This is a far more reliable way to work in the Forex market. Brokers using this model send all trades directly to the interbank market.
These brokers work with multiple liquidity providers, allowing clients to receive the most competitive pricing available during trading.
An ECN (Electronic Communication Network) is an automated system that matches buy and sell orders. If there’s no matching counterparty, the ECN places the best available bid and ask into the system.
A more common—and often more practical—option among brokers is the STP broker, a subtype of No-Dealing-Desk brokers. Let’s break down the pros and cons of this model step by step.
STP technology allows trades to be sent directly to the market without interference. This means the client experiences minimal delays and receives the best available prices. Many traders refer to this as “interbank trading.”
Advantages of working with an STP broker:
🔹Instant execution of orders
🔹No middlemen involved
🔹The broker benefits from your success
🔹Low commissions
🔹High precision in order execution
Although trades are routed to the interbank market, the broker still acts as an intermediary. That being said, it does not interfere with the process. It simply takes a small commission per trade. In essence, you’re only paying for the service of accessing the interbank market.
This is arguably the most important reason to work with such brokers: The more you trade and earn, the more the broker earns. So unlike dealing centers that profit from your losses, STP brokers are genuinely invested in your development and long-term success as a trader.
Technically, you could bypass the broker and trade directly through a bank, but that would require very large capital and a great deal of effort. You’d need to sign contracts, manage everything manually, and deal with far more complexity—not exactly a convenient option.
Cent accounts, offered by some brokers, have nothing to do with real market trading. These trades never reach the interbank market. What they do is consume system resources without offering any real benefit. That’s why true STP brokers typically set the minimum deposit at a more serious level.
STP brokers are especially popular among scalpers and those trading on large timeframes, where execution speed directly impacts performance. And thanks to spreads starting at 0 pips on the most liquid instruments, even strategies that were previously unprofitable can start showing results.
To sum up, choosing the right broker makes up half the success in your trading journey. That’s why it’s so important to approach this decision thoughtfully and opt for a reliable, time-tested company where you can be confident your trades are sent to the real Forex market, not just circulated internally between clients. As you've probably gathered, the most reasonable choice is a reputable STP broker.
Wishing you success and good luck in your trading!
123