what are different types of brokerages?
TRANSCRIPT
The Academy of Financial Trading
What are the different types of Brokerages?
Stop losses explained
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Risk Warning
Why do we need a brokerage?
A brokerage is a medium between us and the market. It is the middle man!
Brokerages explained
Different types of brokerages
They are responsible for placing our orders for us.
There are certain ways a brokerage can operate.
What is most favourable to the trader?
Different types of brokerages
Different types of brokerages
What are the two most common?
There are two main types of brokerages.
Let’s start of by assuming that we want a direct feed to the market and that our brokerage cannot manipulate this – there is no conflict of interest!
This would mean we want to find what is called an STP brokerage – a Straight Through Processor!
Is this best for us?
What about the other?
Stop losses explained
The second main type of brokerage is a Market Making Brokerage.
This is a brokerage that has the power to literally make a market!
It means they have the capacity and interest to adjust market prices, delay orders and essentially make decisions to gain from a clients loss!
Different types of brokerages
Stop losses explained
Different types of brokerages
The Favourable Choice
What is it that is of most interest to us?
Well we as traders want to gain as much from a movement as possible
If a market has a huge movement we want to make all possible profits available to us within that movement
In other words we want to actually capitalise on the true market move, not a partial reflection!
We do not want to have potential total profits skimmed from the top!
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