minus academy faq plus academy faq Check in circle Apple Android Home Magnifer Calculator Mail Email Facebook Twitter RSS Linkedin Linkedin hollower Headphones Wechats Instagram Line Mail 2 Phone Phone 2 Minus Plus Arrow right Arrow left (variant 2) Arrow right (variant 2) Brand logo Brand logo not filled Hamburger Flag of the Hong Kong Flag of the US/GB Flag of the US/GB Flag of the US/GB Flag of the China Flag of the China Flag of the China (traditional) Flag of the Taiwan Flag of the Hong Kong Flag of the Spain Flag of the Russia Flag of the France Flag of the German Flag of the Portugal Flag of the Italy Flag of the Poland Flag of the Czech Flag of the Hungary Flag of the Sweden Flag of the Bulgarian Flag of the Finland Flag of the Lithuania Flag of the Denmark Flag of the Croatia Flag of the Estonia Flag of the Norway Flag of the Romania Flag of the United Arab Emirates Flag of the United Arab Emirates Flag of the Indonesia Flag of the Malaysia Flag of the Korea Flag of the Korea Flag of the Samoa Flag of the Vietnam Flag of the Thailand Flag of the Turkey Flag of the Japan Cross Cross large User Arrow down Arrow up Cube Info list Data comunication Clock Slash
A to Z Academy
A to Z Academy / 1. What are Financial Markets

6. Trading Models, What are they?

November 20, 2020 10:55 AM

Forex brokers mainly run online trading platforms and the trading models are separated into two categories:

1. Dealing Desk (DD) / Market Maker (MM)

The term Dealing Desk is also known as Market Maker (MM). 

2. No Dealing Desk (NDD)

The model of No Dealing Desk is subdivided into Straight Through Processing (STP) and Electronic Communications Network (ECN).  

What are the DD and MM  Trading Models?

The Dealing Desk and Market Maker mainly provide liquidity for the forex market. Firstly, even when trading activities are not active, brokers can still buy and sell foreign currencies by reserving profits for themselves and offering a price for participants in the marketplace. Secondly, brokers then become the counterparties of the traders. Thirdly, the transaction prices that traders see might not be the real market prices. Finally, due to stiff competition in over-the-counter (off-exchange trading) forex trading, however, these transaction prices usually are very close to market prices.  

What is NDD  Trading Model?

Mainly connecting market liquidity, No Dealing Desk allows the orders of traders to be paired up with banks, other brokers and liquidity providers. Therefore, these forex brokers would not become counterparties of traders. In general, the trading volume of individual retail traders is smaller in scale and they need broker platforms to act as a bridge. Without such platform’s for connection, individual retail traders can hardly trade directly in the interbank foreign exchange market. In the industry, trading conducted in the form of NDD is divided into so-called STP and ECN.  

STP  Trading Model

Straight Through Processing refers to a forex brokerage model whereby the orders of traders will be directly sent to banks, other brokers or offerors without the interference of brokers. This is how STP works. Brokers of STP connect to several liquidity providers and the traders can see real-time market prices in the platform and execute their orders immediately.  

Related Article: What is market liquidity?

ECN  Trading Model 

Electronic Communications Network refers to a system that integrates an electronic trading network. The network consisting of retail forex traders, institutional investors, banks, hedge funds and brokers allows participants to trade and match orders with each other. Through the ECN system provided by brokers, traders directly issue orders anonymously to the marketplace. Transactions are made in the fairest manner according to real-time, competitive, and genuine market prices.  

There is a certain degree of conflict of interest between DD or MM models and traders. This explains why many traders prefer NDD — the STP or ECN forex trading platforms. It is worthwhile to note that this does not make the legality of any transaction model questionable. In conclusion, Brokers can run their retail business using the MM or DD models following set law and regulation.

Next Article:  8. Foreign Exchange (FX / Forex) Market


About ZFX (Zeal Capital Market) 
  • The Best Trading Platform Award 2019 from Financial Weekly, Regulated by FCA & FSA.
  • 100+ trading assets, including Forex, Stocks, Indices, Gold, Crude Oil, etc.
  • 3 types of trading accounts to meet the needs of every customer
  • 0 commission, low spread, leverage ratio up to 1:2000
  • Powerful trading platform that executes 50,000 orders/s
  • Open an account with a minimum deposit of $50
  • 24-hour Customer Service

What are the Trading Models in Forex? | Z Academy


Risk Warning: The above content is for reference only and does not represent ZFX’s position. ZFX does not assume any form of loss caused by any trading operations conducted by this article. Please be firm in your thinking and do the corresponding risk control.


Knowledge is POWER
Never miss an opportunity to learn and grow as a trader. Join the ZFX Academy mailing list to be the first to know about our next webinar, article or guide.
Contact Us