Dealing Center: What is it?
Dealing center – the intermediary between the trader and the market
Forex – is a non-bank organization that provides an opportunity to small
customers to conduct margin trading in Forex (foreign exchange trading on the difference
courses). In this article we look at the main features of the Forex market and
functions dealing centers, talk about the regulation of their activities and how
what to look for when selecting a financial intermediary.
Widespread dealing centers received
an ad-free conversion of the principle currencies. If earlier trade
the foreign exchange market was only available to large institutional participants
such as banks, investment funds, multinational companies, now
through dealing centers to take part in cross-currency transactions can
In the broadest sense of the word Forex – is an international
the foreign exchange market, which includes all operations on the exchange of one currency for
another. However, in this article we will keep in mind the forex in the narrow sense
word, namely, margin trading for speculative purposes.
What does ‘speculative purposes’? And although the word in
Russia has several negative sense, speculation in the forex market means only
that you do not gain currency in order to direct its use.
So, making the transaction on purchase of 100 000 dollars, you do not want
use this money in business or for private purposes. No, on the contrary, you
expect soon to sell the purchased currency and earn on the difference
between the purchase and sale. This is speculative trading.
Why trader needs a mediator?
Why trader needs a mediator – dealing center
or Forex Broker? The fact is that for real currency delivery minimum
the amount of the contract should be 5 million. With real
supplies are large market participants. Deliveries to the Forex spot, then
there is produced in one working day. Due to the high cost of one
the operation of the market participants with small amounts do not have the possibility
direct access to the international currency market. To do this they
needs a mediator, which accumulates customer accounts and transactions are
the foreign exchange market on its own behalf and at his own expense. Per transaction mediator
charges a fee, which is dealing centers and brokerage companies has
the form of the spread – the difference between the purchase price and sales at a particular moment
A huge number of small players and countervailing
transactions leads to the fact that within one dealing center have a situation
netting or internal clearing. Not all operations are displayed on the
interbank foreign exchange market, allowing you to reduce the size of the dealing centers
commission on each transaction. Without a financial intermediary output value at
interbank foreign exchange market for the private trader to increase.
How are quotes dealing centers?
The main principle of the Forex market is
freely convertible currency and the absence of restrictions on the amount, direction and
supply prices. This means that there is some central authority
defines foreign exchange quotes. The price of a particular currency is formed under
the impact of supply and demand, so, each commercial bank, there are
their exchange rates.
As for dealing centers, the quotes in them
formed with the flow information quotation systems such as Reuters,
Bloomberg and others, every Forex broker has its own system of formation
quotations. They may differ slightly (by a few points) from
quotes another dealing center or a commercial bank, but they all
follow the global trend. A single quote character for any Dealing
center, whether it is located in Russia or in the United States, associated with transparency
information flows in the Forex market and the development of the Internet.
How are transactions in the Forex market?
All transactions in the Forex market are made using
Internet and special software – trading platforms.
There are different variations of trading platforms, the most famous of them is
MetaTrader, Rumus, ActTrader. Each dealing center has its own variation
known platform, but some features are the same – to allow the trader to open
and close positions to buy or sell a specific currency. when you open
account mediator – dealing desk forex broker or – provide the trader
to download the platform. With the development of mobile trading and trading with
using the web interface there are more variations of different trading platforms.
Modern platforms are equipped with additional functions – wide
tools for the analysis of quotations, and built-in programming languages
How is the Forex market?
Forex market itself is free, although, of course,
national banks can set their quotes for regulation
the internal state of the economy. The regulation only applies to Forex
regulation of relations between the dealing center and customer-trader. AT
UK activities dealing centers FSA regulated company, and
in the US – CFTC and NFA.
As for Russia, there is regulation
activities dealing centers only just beginning to emerge. Still
the concept of dealing center or Forex broker is not fixed laws, and itself
their activities are not regulated by the Federal Financial Markets Service. Therefore, many dealing centers
registered abroad – in European countries or offshore countries.
From the client perspective, a company registered in countries with developed
financial legislation, it is safer.
How to choose the right dealing desk?
When choosing a broker, pay attention to it
reputation and stay on the market, the jurisdiction of the contract and the country
registration, please read the terms of trade (the size of spreads, conditions for
input and output means). Before opening a live trading account is better
work experience dealing center on a demo account. various organizations
regularly conduct surveys among traders and make dealing ratings
Forex centers, which can also help you in choosing a reliable intermediary
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