On the Internet, such concepts as “Broker”, “Dealing Center”, “Kitchen” often flash. Moreover, replacing each other, the simultaneous use of this terminology at best knocks down a potential client, at worst – hangs negative labels on a completely normal company. Let’s bring some clarity on this issue by describing how the Forex broker and dealing center works.
“Who is who?”: how does the Forex broker work?
1. Broker. The company acts as an intermediary between the trader and liquidity providers. Order slippage is possible (execution at a less good price) due to the absence of counterparties to the transaction, this is a sign that the trader is working in the real market. How does a forex broker work? Displays your application in ECN-systems, combining brokers, market makers, liquidity providers, etc., earning only from the spread or other commissions. Broker client’s deposit is not interesting, it is important to him the number and volume of transactions. The minimum deposit to enter the market is 1000 USD. and above.
According to this scheme, foreign brokers work.
2. Dealing Center (DC). Does not bring the trader to the real market. Offering real quotes, the DC itself acts as a counterparty to the transaction. Trader’s profit is a broker’s loss and vice versa. The DC has the opportunity to bring a trader to international markets, but he resorts to this only when the trader leads a successful trade in large volumes (that is, when the DC may incur large losses).
According to this scheme “DC-broker” work almost all companies in Russia, which are market leaders.
- Important: the stereotype that the absence of a trader’s withdrawal to the real market is bad, fundamentally wrong! It is trading within the DC system that allows the trader to start with small amounts ($ 1-10 for binary options, from $ 10-100 for Forex), and there is no point in manipulating the DC: according to statistics, 90% of newcomers “deposit” the first time your fault.
3. “Kitchen” . The kitchen is the slang term for the DC, which is trying to get a trader’s deposit in dishonest ways. Dealing center manipulation examples:
- plug-in installation in MT4 and client’s trade management through the software part of Metatrader Manager;
- manual adjustment of the price trend, which may be invisible, but causing losses to the client;
- invalidation of orders, cancellation of transaction results;
- verification is not at the moment of opening an account, but at the time of withdrawing money with all sorts of ways to delay the time;
- terminal hangup.
This scheme is inherent in young brokers from the 4th tens and below, HYIP projects.
We think in general terms how the Forex broker works with the trader you figured out.
It remains to add that the FxCash rebate service includes both brokers and DCs, but none of them have yet been found to be fraud. We care about our reputation by carefully choosing partners.
FxCash – reliability for the client is always in the first place!