Forex Trading with Direct Dealing

A king of a forex trade system, direct dealing represents a trading reciprocity-based system. Direct dealing includes the process of a market maker expecting the bank that is making the call to reciprocate regarding the setting of a price when needed.

One of the reasons forex traders prefer direct dealing over trading with a broker is that direct trading is characterized with more discretion. This trait is not observed in the dealings that include the services of a broker. However, a combination of brokers and direct dealing systems is applied by some banks.

The market conditions determine which system will be used, either the dealing system or the brokers' system. If the market conditions are of a normal character, then the brokers' system gains a higher share. However, if the market conditions are experiencing fast movement, then the dealing system is the preferred one.

The quality of the price is the factor that dictates the selection of the trading medium by traders. Additionally, the latter tend to develop personal relationships with the other traders and brokers on the market, but these don't play a role on the decision about the trading medium.

Dealing Systems

In the past, most of the direct dealing activities were executed through the phone. However, this means was slowly replaced due to the high possibility of error occurrence and the slow execution of dealings. Additionally, it was difficult to diagnose and find a dealing error, not to mention the complexity of solving such an error.

The introduction of the dealing systems radically changed the nature of direct dealing in the 1980s. These systems represent online computers, characterized by reliability, safety, continuous improvements and speed, which link together the participating banks from all around the world in direct connections.

One of the functions of the dealing systems includes the ability to show the exchange rates and the overall value dates standard for the particular deals. Other advantages of the dealing system include the ability to make fast contacts with other parties, transference from one conversation to another, constant visual contact with the information that is being exchanged on the monitor, as well as providing access to the database.

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