What is the Catch
in this
Dealing Desk vs Non Dealing Desk
Maybe, this is not very correct this a catch, but there is much beyond the choice between dealing desk Forex broker vs no dealing desk Forex broker.
Usually, you will notice that dealing desk brokers are a lot more "friendly" and give you more great perks and bonuses. For example, there dealing desk brokers allow you trading with mini and even micro lots, unlike brokers who require a standard lot of $10,000. This is where you already start thinking "Hmm, why is all that good attitude from dealing desk brokers, compared no dealing desk."
I would not like to tell this about all Forex brokers, but business is business. Usually when they are ready to give away a lot, this means they are sure they will compensate it from some source of income. And for brokers with dealing desk the dealing desk in itself is the source of profits.
When you are trading with dealing desk, this can result in:
- position being closed later then you need (and this gap between actual closing and execution can cost you money)
- during this gap before closing it is possible that some kind of software shows you the "adjusted" rate, with some pips being in the favor of the broker, instead of being in the favor of the Forex trader
Not that much disadvantages, but this is enough to open a huge doorway for the Forex broker for making extra profit and playing against the trader.
Of course, a lot depends upon the reputation of the company. But you saw that a while ago, reputable insurance companies secured absolutely junk value papers from real estate bubble. Come on, it's all about the money in this world. If you have plenty of money and mass media support, you can make most of the people forget about any bad reputation.
That is why in the choice between dealing desk vs non dealing desk, the later is much more fair when it comes down to you - the Forex trader.
Source: Forex Trading
