The operating modes are all different, so let's talk about foreign exchange.
Foreign exchange trading modes are mainly classified.
Background processing mode (DD) usually has a trader or backstage to conduct foreign exchange trading, and the spread is fixed. This model is also called market maker model.
There is no trader or backstage to conduct foreign exchange transactions in NDD mode, and foreign exchange brokers play an intermediary role in this mode, and keep profits by earning spreads. No background processing mode is divided into two categories of trading platforms.
STP (straight through processing) foreign exchange platform is a straight-through foreign exchange platform. In this platform, customers' orders will be sent directly to foreign exchange brokers, including banks or other brokers.
the spread quotation of related platforms is based on an average price of all quotations, and the spread is a floating spread because the price keeps changing.
ECN (electronic communications network) foreign exchange platform, electronic communication network and ECN foreign exchange trading platform allow customers to interact with other traders' orders. There are relative buyers and sellers in this platform, and each order will have an order corresponding to its operation.
profit mode of foreign exchange trading mode
STP (straight through processing) foreign exchange platform: obtain basic quotations from liquid suppliers and make profits by slightly increasing the spread.
ECN (Electronic Communications Network) foreign exchange platform: Earn profit by earning commission instead of spread. Earn profits according to the commission share of customers' profits.
DD foreign exchange platform: spread is only one of the profit means, and you can also make a profit by hedging with customers.
Summary
Generally speaking, short-term traders who like day trading or scalping are suitable for finding a trading platform with low spread, so that it is possible to expand the chances of profit through frequent trading.
STP brokers add a little spread on the basis of their liquid suppliers.
ECN brokers only make profits through commission, and divide the profit amount of customers in proportion without spread.
Market makers make profits by hedging with customers.