7 Types of Forex Brokers Explained

Market makers create their own liquidity by acting as the counterparty to your trades. They make money from the spread, which is the difference between the buying and selling price.

ECN brokers provide a platform that connects traders directly to the liquidity providers (banks, other brokers, etc.) without dealing as the counterparty.

STP brokers send your orders directly to liquidity providers without any intervention. They don't take the opposite side of the trade but route the orders to external liquidity sources.

DMA brokers allow you to directly place your orders into the market. These brokers offer access to the exchange's order book and are typically used by institutional traders.

Hybrid brokers combine aspects of both market makers and ECN/STP brokers, offering traders the best of both worlds.

Most forex brokers fall into this category, providing access to retail clients. They can be market makers, ECN, or STP brokers.

These brokers cater primarily to large institutions like hedge funds, banks, or financial firms.