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Lesson 2: What is an FX dealer? - YouTube
Channel: Financial Wars
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welcome back everyone I'm rob Booker I'm
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the best-selling author of adventures of
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a currency trader I've been a trader for
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18 years welcome to our beginning
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lessons on FX trading 101 sponsored by
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Forest Park effects in this listen I
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want to talk to you briefly about what
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an FX dealer is so you're gonna see if
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you type into Google hundreds of FX
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dealers appear in the search results and
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I want to talk about the major kinds of
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FX dealers and what kind of things you
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would look for in an FX dealer now we're
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talking about spot FX what that means is
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you're not trading futures you're not
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trading stocks you're trading what is
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called spot FX or just sort of the raw
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FX settled on a daily basis that doesn't
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really have any major repercussions you
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can still bet that it's going to go up
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or bet that it's going to go down an FX
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dealer is a company that is set up to be
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an intermediary between you and a bank
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as you trade now there are two major
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kinds of FX dealers one is what people
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refer to as STP or straight through
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processing there's a lot of arguing
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online about these kinds of things as
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you'll see as time goes on this kind of
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dealer is said to be a dealer that will
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immediately match your trade up with
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someone else inside the network or a
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bank immediately so that the the all the
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FX dealer is doing is acting as an
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intermediary to immediately connect you
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to another person who wants to take the
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other side of your trade and if you win
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that other trader is a loser and if you
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lose the other trade as a winner it is
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thought that straight through processing
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or it is widely considered to be maybe a
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a better way to trade I'm not sure
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that's really the case but you're going
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to see people talk like that you're
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going to see people that prefer to have
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their trades matched up with another
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trader immediately the other kind of FX
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dealer is a dealing desk FX dealer now
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what this refers to is that let's draw a
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picture of your computer here so you're
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trading on your computer right here
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and then your trade is going to the FX
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dealer right here so that's going to the
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FX dealer right there in a dealing desk
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situation this dealer takes the other
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side of your trade if you say you want
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to buy Japanese yen they're selling you
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Japanese yen and if you lose they win
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and if you win they lose because they're
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the other party to the trade and it's
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often thought that wow if you're dealing
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if you're working with a dealing desk
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broker they're on the other side of the
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trade and this could end up being sort
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of it and evil you know nasty kind of
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company because they could stop you out
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of your trades or they might want you to
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lose so that they can win and in the
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early days of forex trading that was
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really true there were a lot of bad
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players in the forex market they would
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be companies set up that would take the
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other side of your trade and then stop
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you out and argue with you on the phone
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and whatever else but these days there
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are very few significant differences
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between the way that you are quoted a
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price on either kind of broker or dealer
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and there is very little difference in
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how well you're going to do as a trader
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in dealing with either one of these two
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types of brokers or dealers generally
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speaking if you're dealing with a
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dealing desk broker you can execute
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larger trades without a problem because
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they will just take the other side of
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the trade if you're dealing with a
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straight-through processor and your
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trading millions of dollars you might
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have trouble getting some of your orders
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filled all in one chunk because they
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have to match you up with another trader
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inside the system or a bank but for
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almost everyone working or trading or
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whatever there are not major problems
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with one of these or the other and I
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think that all arguments about this are
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basically a waste of time what you
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really want to look for when you are
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choosing a dealer is
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the company size or the years how many
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years they've been in business you want
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to check if they're a public company and
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you want to check that the regulatory
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authority so the Reg authority is either
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you want your broker to be regulated by
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and and this is my opinion anyway you
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want them to be regulated in the UK the
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US or Australia these are the major
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regulatory bodies that are the most
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sophisticated and are doing the best
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audits on brokers generally speaking if
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your broker is not regulated by one of
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those authorities the European
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authorities pretty good too but these
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three are the best if they're not
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regulated by those authorities you may
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be dealing with a broker that isn't
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going to answer to anyone if you have a
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problem with your broker and I'm
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exchanging the words broker and dealer
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interchangeably but they're really FX
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dealers is really what they're called
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all these videos are sponsored by Forest
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Park FX if you're interested in FX
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trading contact Forest Park FX to get
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cashback rebates on every trade you
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place you can contact them at Forest
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Park FX com remember trading involves a
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substantial risk of loss terms and
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conditions will apply and you can find
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me at Rob Booker com
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I'm happy to be with you and we will be
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right back with our next lesson
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