Forex Brokers Types

Forex Brokers have a different way of handling transactions and executing orders. Details about the basic types of forex brokers and their primary transactional qualities and distinctions follow. Source

Type Short Description Description
BinaryBinary OptionA binary option is a financial product where the buyer receives a payout or loses their investment, based on if the option expires in the money. Binary options depend on the outcome of a "yes or no" proposition, hence the name "binary." Binary options have an expiry date and/or time. At the time of expiry, the price of the underlying asset must be on the correct side of the strike price (based on the trade taken) for the trader to make a profit.
DMADirect market accessDirect market access (DMA) refers to access to the electronic facilities and order books of financial market exchanges that facilitate daily securities transactions. Direct market access requires a sophisticated technology infrastructure and is often owned by sell-side firms. Rather than relying on market-making firms and broker-dealers to execute trades, some buy-side firms use direct market access to place trades themselves.
ECNElectronic Communications NetworksAn ECN broker is a forex financial expert that uses electronic communications networks (ECNs) to give clients direct access to other participants in currency markets. Because an ECN broker consolidates price quotations from several market participants, it can generally offer its clients tighter bid/ask spreads than would be otherwise available to them.
MMMarket MakerA market maker (MM) is a firm or individual who is actively quotes two-sided markets in a security, providing bids and offers (known as asks) along with the market size of each.
STPStraight-Through ProcessingStraight-through processing is an automated electronic payment process that is used by corporations and banks. STP allows for the entire payment process, from initiation to final settlement, to be free of human intervention. Straight-through processing can help local businesses, as well as large corporations, pay and receive money faster than the traditional process.
UTUnkown TypeNo information available for Forex Broker Type.