Kindergarten - Brokers and Markets

Question 1

Which are the two types of FX Brokers?

Answer 1

Dealing Desks(Market Makers) & No Dealing Desks

Question 2

Which two types of No Dealing Desk brokers are there?

Answer 2

Straight Through Processing and Electronic Communications Network + STP

Question 3

How do Dealing Desks Operate

Answer 3

They make money through spread. They provide both buy and sell quotes. They fill both buy and sell orders of their clients

Question 4

How do No Dealing Desks Operate

Answer 4

They match buy/sell orders. They link traders, banks, funds and other brokers together.

Question 5

How do STP operate

Answer 5

Straight through brokers simply passes their orders straight onto liquidity providers.

Question 6

How do ECN operate

Answer 6

They allow orders of their clients to interact with orders of the other participants of the ECN. ECN can hence also allow to see depth of market.

Question 7

Which 6 things must you consider when choosing a broker

Answer 7

1. Security
2. Transaction Costs
3. Deposit and Withdrawal process
4. Trading platform
5. Execution
6. Customer service

Question 8

What are the three types of Forex Market Analysis

Answer 8

1. Technical (Price Movement)
2. Fundamental (Economic and Political)
3. Sentiment (Market consensus)