so do most NDD brokers
anyone wanting clarification of this need look no further than at why FXCM were recently kicked out of the US and are no longer allowed to trade there
don’t be fooled by these combinations of letters like “NDD” and “STP” and “ECN” which are there solely to fool and confuse the inexperienced
from the point of view of protecting your funds and reducing the chances of your broker trading against you, these confusing terms don’t necessarily signify anything helpful or informative to a prospective retail customer
this is NOT the way to try to choose a safe broker
the way to do that is to look at (1) where and (2) by whom they’re regulated, (3) what their regulatory history is (very, very, very important!), (4) whether they segregate client funds, (5) how long they’ve been established, and (6) what their reputation is
the sixth of those six points is the hardest to judge, because it’s both subjective and interpretative
the first five are objective and need no interpretation, they just need access to publicly available information
when judging their reputation, IGNORE “review websites” (where brokers post under hundreds of different names) and especially “affiliate review websites” which have affiliate links and recommend the ones that produce the most affiliate income for them when new customers open accounts having clicked on their link and stored their affiliate cookie on their PC’s
also IGNORE forum comments, especially in beginners forums where many of those posting, with honest and helpful intentions, don’t understand what the different types of brokerage are and how they work, and are confused about things like “NDD” and “STP” and “ECN” which are confused and confusing to people who don’t really know the industry from the inside, and about which masses of misguided nonsense is published all over the web
take recommendations only from people you know personally (not just online) and trust, whom you know to be trading successfully over the long term
if, as a beginner, you’re unable to do that (like most beginners), then just stick to the first five parameters of the six, and ignore “recommendations”
if anyone’s really interested, i recommend Oanda, who are honest and reliable, but obviously you have absolutely no reason to believe me at all as you don’t know who i am, and for all you know i might be an Oanda employee (actually i’m not, and i’ve never worked for them, and that recommendation is made even after allowing for the fact that their spreads aren’t quite the very best in the industry)
better still, if you have enough funds, use Interactive Brokers, which is a genuine broker, not a counterparty (that means they don’t hold the other side of your trades)
p.s. nearly forgot to say, most important of all, run run run away from “brokers” offering deposit-bonuses and no-deposit-bonuses and free competitions: these things are the biggest red flags you can find - genuine, honest brokerages can’t afford to offer those gimmicks and don’t need to anyway
