Definition and the core idea
“No dealing desk” (often abbreviated as NDD) is a description of how orders are handled. Instead of a dealing desk acting as the counterparty, orders are generally passed toward liquidity sources, and the final execution price depends on what those sources offer at the moment the trade is sent.
Because the liquidity and execution path still exist, NDD does not remove trading costs. It mainly changes which parties are involved and what components make up the total cost you experience.
Direct costs that can affect the outcome
Even with an NDD model, the most visible costs are typically the ones that are explicitly charged or embedded in quoted prices.
First, spreads: the difference between the bid and ask prices. Depending on market conditions and the way prices are quoted, spreads may widen during illiquid periods. To keep this explanation self-contained, assume the spread is the primary direct cost embedded in the price.
Second, commissions or per-trade fees (if the account uses them). Some accounts charge a separate commission while using tighter quoted spreads, so your total cost may come from the combination of spread plus commission.
To illustrate with a simple assumption: if you buy at the ask and later sell at the bid, your gross cost relative to the mid-price comes from the spread, and any commission adds on top.
Indirect costs tied to execution and holding
Costs can also appear indirectly, even when no explicit commission is charged.
1) Slippage (execution difference). If the price moves between the time your order is sent and when it is filled, you may receive a worse price than expected. The size of slippage is not fixed; it can vary with volatility and order size.
2) Order type and fill behavior. Market orders and limit orders behave differently under fast price changes. Under stress, partial fills or delayed fills can change the effective average execution price.
3) Overnight or holding costs (swap/rollover). If the instrument is held beyond a certain time, financing-type charges may apply. These depend on the instrument and the direction of the position.
4) Additional fees in account terms. Some account setups include other charges (for example, inactivity or certain payment-related fees). These are not “execution costs” in the tight sense, but they affect your total cost of trading.
A practical verification method (without assumptions of future results)
You can verify the relevant facts independently by focusing on what is already documented and what you can observe.
-
Read the account cost section (spreads, commissions, and any stated non-trading charges). Treat these as the baseline, since they are usually defined in account terms.
-
Separate the cost components you can observe:
- Quoted spread at the time you trade (direct)
- Any commission charged on the account statement (direct)
- Execution price vs. quote timing to estimate slippage (indirect)
- Compute a simple total-cost estimate for sample trades using your own records. Use the assumption that total cost per trade is approximately:
- (spread impact) + (commission) + (slippage impact, if any) + (swap if held overnight).
Make the limitation explicit: this calculation depends on the specific trade timestamps, order type, and whether you held the position across the relevant rollover window.
Material limitations and failure modes
Several issues can prevent you from concluding that costs are “low” based on a single observation.
First, market regime changes: spreads and slippage can behave differently in quiet vs. volatile conditions. Relationships seen historically do not guarantee future costs.
Second, partial fills and averaging: your average fill price may not match a single quote. If your order is split, the effective cost can differ from the simplest spread-only model.
Third, interpretation gaps: account statements show realized results, while quotes show intended prices. Without aligning timestamps and order types, comparisons can be misleading.
Fourth, jurisdiction and provider differences: fee schedules, swap calculation rules, and execution definitions can vary by provider and region. If you rely on general descriptions, always check the specific terms that apply to your setup.
Next questions to ask before you compare setups
To understand “what costs can affect” NDD in your own context, focus on these verification questions: