What Is a Stock Broker?
The broker is the intermediary that opens your access to the financial markets. Without one, an ordinary investor can't buy stocks, currencies, or other instruments. We explain what it does, how it earns money, how it executes orders, and why choosing a regulated one changes everything.
What Exactly Is a Broker
A stock broker is an authorized company that intermediates transactions between you and the financial markets. As a private individual, you can't access an exchange or the international currency market directly — you need an intermediary that opens up access for you. The broker provides the platform, the trading account, and the connection through which you send buy and sell orders.
Put simply, think of it as the bridge between your money and thousands of instruments: stocks, currencies, indices, commodities, or funds. Its role is to execute what you ask correctly and quickly — not to tell you what to do, nor to guarantee you a result.
Some transactions take place on organized exchanges, but a large part of the currency market and derivative instruments happens over-the-counter (OTC) — meaning directly between participants, without a central exchange. In both cases, the broker is the one that gives you access.
The broker's trade isn't new. The intermediary between buyers and sellers has existed for centuries, always paid through a commission or a markup. The first modern exchange appeared in Amsterdam in 1602, with the first publicly tradable shares issued by the Dutch East India Company — the same place where the first initial public offering (IPO) in history took place.
Did You Know?
In 1792, 24 brokers signed the "Buttonwood Agreement" under a tree on Wall Street and set a minimum commission of 0.25% of the value of transactions. That two-sentence document is the birth certificate of the New York Stock Exchange (NYSE).
What a Broker Does for You
Beyond giving you access to the markets, a broker has a few concrete responsibilities toward you.
Market Access
Opens the door to international exchanges and the currency market, which you otherwise couldn't reach as a private individual.
Platform and Execution
Provides the program through which you place orders, and executes the trades in the market within seconds.
Tools and Information
Gives you charts, news, economic calendars, and a demo account — the tools you use to do your analysis before trading.
How It Works, From Account to Withdrawal
The journey of an order is simpler than it looks. The same steps apply whether you're trading currencies or investing in stocks.
Open an account
Registration and identity verification
Deposit funds
Fund your trading account
Platform
See real-time prices and analyze the market
Place an order
Buy or sell
Execution
The broker sends the order to the market
Withdraw funds
Withdraw your money and profit
Where the Costs Come From and How the Broker Earns Money
Keep in mind: the broker doesn't earn the entire spread. The raw spread comes from the liquidity provider, and the broker adds a small markup on top of it — or, instead of a markup, charges you a commission. The swap, on the other hand, isn't the broker's earnings but a financing cost.
Spread (the markup)
The difference between the buy price and the sell price. The broker only earns the markup it adds on top of the raw spread. On raw accounts, this markup is zero.
Commission
A fixed fee per trade, commonly found on raw/ECN accounts, in place of the spread markup.
Swap (financing)
It's not the broker's profit, but the cost of holding a position overnight, determined by the interest rate difference between the two currencies.
Where the Price You See Comes From
The price on the platform isn't invented by the broker. A serious broker gathers it from multiple liquidity providers — large Tier 1 banks (such as JP Morgan, Citi, UBS, or Deutsche Bank), market makers, and electronic communication networks (ECN) — and builds a single quote from them.
The aggregation engine — that is, the process of gathering and combining multiple sources into a single quote — takes the best buy price (bid) from one source and the best sell price (ask) from another, to get the tightest spread possible. The more providers a broker has connected, the more competitive the price tends to be.
Provider A
EUR/USD
1.0850 / 1.0852
Provider B
EUR/USD
1.0851 / 1.0853
Your Quote
the best of both
1.0851 / 1.0852
Part of this advantage reaches you as a better price, part may stay with the broker as a markup — usually a combination of both.
Types of Brokers, by What They Offer
Depending on what you want to trade, you choose a different type of intermediary. On Trading.md, each type has its own dedicated page.
Trading Brokers
Access to CFDs on currencies, indices, and commodities — positions on the direction of a rise or fall.
Brokers and Banks for Investing
You buy real stocks, ETFs, and bonds — through brokers and banks specialized in spot investing, where you become the owner of the securities.
Crypto Exchanges
Platforms for digital currencies. We'll bring them back as the crypto market becomes regulated in Moldova.
Funding Firms (Prop Trading)
They provide you with their own capital, after an evaluation, and share the profit with you. They aren't brokers proper, but a separate path to access.
Some brokers and banks are multi-asset: they give you access to both CFD trading and real spot investing (stocks, ETFs, bonds), not just one of them.
CFD trading involves a high level of risk. Between 74% and 89% of retail investor accounts lose money when trading CFDs.
Types of Brokers and Order Execution
The platform and the way your order is executed are two different things. The same platform — MetaTrader 5, for example — can be offered both by a broker that is your direct counterparty and by one that sends your order into the market. The execution model affects the spread, the speed, and the cost, so it's worth understanding.
What Type of Account We're Talking About Here
This chapter describes execution at CFD trading brokers, in the over-the-counter (OTC) market. For real investments in the spot market (stocks or ETFs bought on an exchange), things work differently: your order reaches an exchange's order book, you become the real owner of the security, and it's held with a custodian. The models below refer to the CFD/OTC world.
The Liquidity Chain and Tiers
In the over-the-counter market there's no single exchange, so there's no single official price either. The price is born in a hierarchy, across tiers:
- Tier 1 — the largest global banks (JP Morgan, Citi, UBS, Deutsche Bank) and the major non-bank market makers (Citadel Securities, XTX Markets). They form the interbank price and have the greatest market depth.
- Tier 2 — smaller banks and institutions that take liquidity from Tier 1 and pass it further on.
- Tier 3 — retail brokers and aggregators, who connect to the tiers above through prime brokers. As you go down, depth decreases and cost increases.
| Link | Who It Is | What It Does |
|---|---|---|
| 1. Interbank | Tier-1 banks and non-bank market makers | Forms the market's base price |
| 2. Prime Broker | A large bank | Provides credit, settlement, and access to institutional liquidity (requires large capital) |
| 3. Prime-of-Prime | Intermediary firm | Distributes the prime broker's access to smaller brokers |
| 4. Retail Broker | Your broker | Aggregates the prices and passes them to you in the platform |
| 5. You | The trader | Send orders from the platform |
The broker doesn't invent the price: it aggregates it (gathers and combines it) from its liquidity providers and passes it on in the platform, adding its own markup.
1. Market Maker (With a Dealing Desk)
A market maker broker, also called a "dealing desk," creates its own market: it takes prices from liquidity providers, but quotes you its own prices and is your counterparty in the trade. Spreads are often fixed, with no separate commission, and the platform is simple — which is why the model is accessible to beginners and small accounts.
2. No Dealing Desk (NDD): STP, ECN, DMA
A No Dealing Desk (NDD) broker is not your counterparty: it passes the order further on, to its liquidity providers or into a network (ECN), where your order is matched with another market participant. There are three variants:
| Model | How It Executes | Spread / Cost | Best For |
|---|---|---|---|
| Market Maker | The broker is your counterparty, quotes its own price | Spread often fixed, no commission | Beginners, small accounts |
| STP | Sends the order directly to liquidity providers | Variable spread, starting low | General trading |
| ECN | Network with raw price, aggregated from multiple providers | Spread from 0 + fixed commission | Scalping, automation |
| DMA | Direct access to the market's order book | Market price + commission | Professionals, institutions |
How the Broker Actually Earns Money
A regulated broker has several sources of revenue, all transparent:
- Spread (the markup) — the broker widens the raw spread received from the provider (for example, from 0.2 to 0.8 pips), and the difference stays with it.
- Commission — an explicit fee per lot or per trade, typical on ECN/raw accounts, where the spread stays tight and unmarked-up by the broker, but you pay this commission separately.
- Swap — the overnight financing cost, made up of the interest rate difference (the reference rate) plus a small margin from the broker.
- B-Book results — on the positions it keeps in-house, client losses stay with the broker, and client gains are paid by the broker out of its own funds.
- Auxiliary fees — for inactivity, currency conversion, or withdrawals.
A-Book and B-Book: What Few Traders Know
The models above describe the technology and the route. But there's also a second angle — who your counterparty is:
- A-Book — the broker passes your order into the market (NDD). It earns from commission or markup; it has no stake in your outcome.
- B-Book — the broker is your counterparty (market maker). It earns from the spread and, potentially, from client losses — hence a structural conflict of interest.
In practice, most brokers use a hybrid model: they pass some clients to A-Book and manage the rest on B-Book, hedging their exposure. So MM/STP/ECN and A-Book/B-Book describe the same reality from two angles: the route, and the counterparty, respectively.
Important, No Myths
All of these models are legal and permitted by law and by regulators. Whatever model it chooses, a regulated broker has no right to and cannot manipulate the price — the choice is a business and risk-management decision by the broker, not a trap for you. In a regulated market, whoever understands the market wins. What's more, many brokers automatically move consistently profitable traders to A-Book — so, in short, as you get better, you end up on the right side of the table.
Why Quotes and Charts Differ Between Brokers
Because the Forex market and CFDs are over-the-counter (OTC) and every broker builds its price from its own liquidity providers, charts can differ slightly from one broker to another. That's normal: there's no single official price, and in volatile moments (news, session opens) the differences and spreads widen. Likewise, price slippage occurs in both directions and is natural in a fast-moving market.
It becomes suspicious when the differences are systematically against you. Warning signs appear only at unregulated brokers: artificial spikes right at the levels where you have your stop-loss (stop hunting — a practice found exclusively at unregulated brokers), slippage that's only negative, spread widening unrelated to the market, or repeated requotes. How to check: compare the broker's price with a third-party source (for example TradingView or a regulated broker) and, most importantly, choose a regulated broker. A regulated broker is periodically audited by independent auditors and supervised by the authority that licensed it (FCA, CySEC, and others) — and cannot manipulate the price.
Does a Broker Ever Work Against You?
At a pure market maker broker (B-Book), the broker is your counterparty, so your loss can mean its gain — there's a structural conflict of interest. That doesn't mean it "wants" you to lose. A regulated broker cannot manipulate the price and must offer you fair execution; most are hybrids and hedge their exposure in the market; and a serious broker earns from spread and volume across all clients, not from your loss specifically. At an NDD/ECN broker the conflict doesn't even arise: it earns from commission regardless of whether you win or lose. That's why regulation and execution policy matter — not the label on the website.
Academic Foundation (CFA)
In market theory (CFA — "Market Organization and Structure"), a market maker corresponds to a "quote-driven" market (dealers quote prices), while an ECN corresponds to an "order-driven" market (an order book, like on an exchange). These are classic mechanisms, not inventions of retail brokers.
What Professionals and Institutions Use
Institutions (banks, hedge funds, asset managers) don't trade through a market maker. They use prime brokerage and agency-style execution: direct market access (DMA) and institutional ECNs, with Tier-1 liquidity sourced directly. They want low latency, transparency, market depth, and the absence of conflicts of interest. For an ordinary investor, however, a regulated market maker often remains the simplest starting point.
Regulated vs. Unregulated Broker
Regulation means that a financial authority supervises the broker and enforces rules to protect clients. It's the line that separates safety from unnecessary risk.
Regulated Broker
- Supervised by authorities (ESMA/MiFID II, FCA, ASIC, CySEC)
- Client funds held separately
- Transparency and reporting rules
- Complaint-resolution mechanisms
Unregulated Broker
- No oversight by any authority
- No control over your funds
- High risk of unfair practices
- Difficult or impossible to recover your money
In addition, in many jurisdictions regulated brokers participate in investor compensation schemes: for example, the Investor Compensation Fund (ICF) in Cyprus covers up to €20,000 per client, while the FSCS in the United Kingdom compensates investors in the event of the firm's insolvency. These are safety nets that an unregulated broker doesn't offer.
All brokers recommended on Trading.md are regulated — that's our first selection rule. See how to choose the right broker
Where Your Money Is Held
When you deposit money with a regulated broker, it isn't mixed with the firm's own money. It's held in a segregated account — a separate account, usually at a large bank, used exclusively for client funds.
At most brokers, all clients' funds sit together in one shared segregated account (the "omnibus" model), and the broker tracks each client's balance in its internal ledger. Some brokers use separate accounts for each individual client. Both approaches are accepted by regulators, as long as client money can't be used for the firm's own expenses.
When you open a position, the required margin is reserved from your balance, but the money physically stays in the segregated account — it doesn't go anywhere with each trade.
What Happens If the Broker Goes Bankrupt
The money in the segregated account is returned to clients, separately from the firm's creditors. That's exactly why it matters so much that the broker is regulated. For real investments in stocks or ETFs, the securities are held with a custodian — a similar separation mechanism.
Are There Local Brokers in the Republic of Moldova?
For international markets, no. There are no local brokers in Moldova that give direct access to global exchanges — access happens through intermediary firms that work with regulated international brokers.
Where Trading.md Fits In
Trading.md is not a broker. We're a consulting, education, and intermediary firm that gives you access to regulated international brokers, helps you open an account, and provides education and technical support. We don't hold your money and we don't execute trades — that stays between you and the regulated broker you choose.
How to Choose the Right Broker
Before opening an account, check the regulation, the costs (spread, commission, swap), the platform, the execution model, the deposit/withdrawal methods, and the quality of support. Each of these is worth analyzing in detail.
Read the complete guide: How to Choose a Broker or Compare regulated brokers side by side
What We're Asked Most Often
I want a trustworthy broker. How do I recognize one?
A trustworthy broker is, above all, one regulated by a serious financial authority (ESMA/MiFID II, FCA, ASIC, or CySEC). Check the license number on the authority's website, whether client funds are held separately, and its reputation. On Trading.md we recommend only regulated brokers — that's our first selection rule.
Is Trading.md a broker?
No. Trading.md is an intermediary firm that gives you access to regulated international brokers, plus education, consultations, and support.
What's the difference between a broker and a bank?
Brokers specialize in market access and trading, and some banks also offer brokerage services and access to investments. Both can be regulated.
How much do a broker's services cost?
The main costs are the spread markup or the commission, plus the swap (the overnight financing cost). Their level differs from broker to broker and from one account type to another.
What do market maker, STP, and ECN mean?
They're execution models. A market maker is your counterparty and quotes its own price; an STP broker sends the order directly to liquidity providers; an ECN broker uses a network with a raw price and a fixed commission. The details are in the chapter on execution.
Why does it matter that the broker is regulated?
Regulation brings oversight, separation of client funds from the firm's own, and transparency rules — meaning a level of protection for your money.
Can I make real investments in stocks through the recommended brokers?
Yes. Among our partners are brokers and banks that allow real investments in stocks, ETFs, and bonds, not just CFD trading.
Do I need a lot of money to start?
The amount needed depends on each person's profile and goals. There's no universally valid number — you determine it based on your risk tolerance.
How do I withdraw my money from the broker?
Withdrawals are made from the trading account, usually via the same method used for the deposit. A regulated broker processes withdrawals according to the rules imposed by the authority.
Ready to See the Regulated Brokers?
Compare our international partners — all regulated — and open an account with help from the Trading.md team.