The type of broker you choose is totally up to you, depending on the trading you would like to do. One broker is not better than the other when it comes to terms of type of brokers. It basically depends on the type of trader you are, and which broker works the best with each type of trading. You get to choose whether or not you would like to trade on tighter spreads and pay a commission per trade, or use wide spreads with no commission during the time of trade.
On normal occasions, a trader and scalper might prefer a tighter spread because it is easier to take a smaller profit. This is because the market needs less of a ground to cover when it comes to covering the transaction costs. Wider spreads are insignificant to a longer term swing or position trader over the board. In order to make the decisions you have easier, a summary of the differences between the Market Makers, STP Brokers, and STP+ECN Brokers is provided to those in question:
|Will take the opposite side of the trade that you make.||They provide a pathway between client and liquidity providers.||Prices will come from liquidity providers and other ECN participants in the system.|
|Have fixed spreads||Automatic execution with no re-quotes.||There are variable spreads or commission fees involved in this trading.|
|Orders are filled by the broker on a discretionary basis on their own time.||They have variable spreads to use if it is your preference.||They create a pathway between the client and the other participants in the system.|
|They give artificial quotes.||All of the prices come from liquidity providers.||They have automatic no re-quotes.|
|They will display the depth of the market and liquidity information.|
Brokers are Not All Bad
Forex brokers are not all out to get you when you would like to trade. You might find that a lot of places look down on them because of what they do, and how they do it. They want to make sure they are getting your business, and not running you out of your business. If you lose your money trading with them, then they will not have references of money they have made for clients later on down the road.
Desk Brokers look for an ideal client that is one who, more or less, will break even when working through them. This is a client who doesn’t win or lose at the end of the day. This is one way that the broker can earn money on the transactions that the client makes. This way, the client also stays in the game and does not blow all of the money away, allowing the broker to make more money over time by keeping them in the game. They want their clients to come back for more trading in the end.
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