Basically, there are three types of Brokers:
- market maker
- direct market access
- exchange-traded .in ‘exchange-traded’ business model it functions merely as an intermediator between traders
The first two types Market maker and direct market access models are both the most common types of brokers available online.
The brokers define the assets which may be traded. They also dictate the terms and conditions of the customer agreement, including the margin requirements for trading accounts.
When you trade you enter directly into an agreement with the broker
Each broker has their own trading terms and conditions, the trader against the broker, rather than on an exchange, Where traders trade with each other. a broker operates either via the market maker or the direct market access models.
When a broker operates which trade against each other.