Forex Trading: Direct Dealing versus Brokers

Guest Posting by Bobby Quill

 When it comes to trading in the foreign exchange market, there are two main ways  in which dealer institutions can trade with each other: direct dealing and through forex brokers. These two methods are very different from one another.

The main market makers publish a running list of the prices at which they will buy and sell the major currencies. These rates are featured to all market dealers on their computer screens. In addition, the dealer reveals his prices and both dollar rates and cross-rates are shown. While the computers are updated regularly throughout daily FX transactions, the prices are only indicative. Direct dealing is when a trader or customer contacts the bank directly to get a firm price for the currency they wish to buy or sell. Major market makers reveal an updated list of main bids and offer rates which are displayed on computer screen.

On the other hand, dealer institutions can also go through brokers. Brokers provide the best price available among the quotes. Through a broker, a market maker or dealer can make a quote for only one side of the market instead of both sides. Brokers or dealers may also use electronic brokerage systems, such as Finexo forex.

Individual Investing or Forex Robots?

If you’re involved in forex trading, you will have to decide whether you want to rely on automated systems, such as forex robots, or the traditional method -- by reading forex indicators and making decisions based on your knowledge and instincts.

There are pros and cons to both methods. Forex trading software and robots automate the process and make trades based on set parameters. This is a good option for many new forex traders who want to get involved in the trading world but lack the knowledge to make trades on their own. There are also cons to relying on a robot or automated system. For one, you can lose control of your investment by putting faith into an automated system.

However, the traditional method is for experienced traders. Going the traditional route for 4x trade transactions increases the potential risks but also the possible rewards. While it is not for everyone, it is a strategy that offers the biggest potential gains.