Broker

What is a Broker in Prop Trading?

A broker is an individual or firm that acts as a middleman, allowing you to place trades in the financial markets. Through a broker, you can buy or sell assets like forex, commodities, indices and etc.

What is an Example of a Broker?

Popular forex brokers used in prop trading and retail environments include IC Markets, Eightcap, and Purple Trading. These brokers provide platforms like MT4, MT5, cTrader etc, enabling traders to execute orders on global financial instruments.

For example, if a trader is trading the EURUSD pair through an ECN broker, the broker routes the order directly to the liquidity pool, where it gets matched with the best available price. In contrast, a market maker broker might fulfill the order internally.

Types of Brokers in Trading

There are two main categories of brokers:

• Dealing Desk (DD): Also known as market makers, these brokers may take the opposite side of a trader’s position. They create an internal market and often provide fixed spreads.
• No Dealing Desk (NDD): This includes ECN (Electronic Communication Network) and STP (Straight Through Processing) brokers. These brokers pass traders' orders directly to liquidity providers without interference, offering variable spreads and deeper liquidity.