Market Makers Forex BrokersMarket Makers Forex Brokers

Market Makers are brokers trading Forex, Commodities, Stocks and Indices by creating their own market. They are also called Dealing Desk Brokers (DD) or Agents.

What is a Market Maker Broker?

A Market Maker is a broker that creates a market within a market. A Market Maker takes always the opposite position than the position of a client. This means that when a client is opening a trading position instantly the broker becomes the counter party.

◙ Client goes Long ↔ The Market Maker goes Short

◙ Client goes Short ↔ The Market Maker goes Long

Two Types of Market Maker Brokers

There are two types of Market Makers:

(1) Retail Market Makers Brokers (Financial companies dedicated to serve individual traders.)

(2) Institutional Market Makers (banks or large corporations offering bid/ask prices to their clients)

How a Market Maker Makes Profits

Market makers tend to stand in the middle between two opposite client orders and make money by charging a spread between bid and ask price.

Example:

Client-A: Buys 100,000 Euro against USD at 1.2000

Client-B: Sells 100,000 Euro against USD at 1.2004

That’s it, the broker just made 4 pips / 100,000 USD, without any risk. Of course sometimes a large client order may not get an equal-sized opposite position. In this case the Market Maker is vulnerable to what is called as the Market Risk.

Cost of Forex Trading with a Market Maker Broker

Market Makers charge no trading commissions, they charge only spreads.

(1) High spreads between ask and bid price.

These are the minimum spreads offered by Market Makers nowadays:

EURUSD spread at 2 pips

GBPUSD spread at 3 pips

USDJPY spread at 3 pips

It is obvious that the above minimum spreads are considerably wider than the minimum spreads offered by ECN and STP Forex Brokers.

Advantages when Trading Forex with a Market Maker Broker

Here are some of the advantages when trading with Market Makers:

(1) Low minimum account requirements which is usually 100USD

(2) Welcome Bonus promotions, usually in the form of credit bonus but sometimes you may be able to withdraw the bonus capital

(3) Free Bonus Promotions, many brokers offer free bonus up to $100 which is ideal for beginners in order to test their skills in ‘Real’ market conditions

(4) Easy to use trading platforms (web-traders)

(5) Great selection of trading assets. Market Makers offer the wider asset index in the market especially as concerns stocks and indices

FXCC Forex Trading

 

Final Thoughts

For many traders, trading against your broker isn’t a wise practice. For advanced and professional traders a market maker is not the best choice. Market Makers charge wide spreads and considerably delays during news releases. News trading or scalping using a Market Maker is simply out of the question. From the other hand, Market Makers consists an ideal choice for beginners and semi-advanced traders. Easy platforms, wide asset selection and very low minimum account requirements can prove very useful for non-experienced Forex Traders.

Compare the Accounts of Market Maker Brokers

In the following table you may compare the trading terms of some popular Market Makers.

MARKET MAKER

REGULATION

TRADING PLATFORMS

ACCOUNT INFO

OPEN ACCOUNT

 

» AVA TRADE

CBI (Ireland) and ASIC (Australia)

METATRADER-4, WEBTRADER, ZULUTRADE

 

MOBILE TRADER

Minimum Size: $100

-Leverage up to 1:400

-Welcome Bonus up to 50%

 

 

► AvaTrade Accounts

» ETX CAPITAL

FCA UK, MiFID

METATRADER-4, ETX WEB-TRADER

 

MOBILE TRADER

Minimum Size: $100

-Leverage up to 1:200

-Welcome Bonus up to 60%

 

► ETX Capital Accounts

 

» XEMARKETS

FCA UK, CySEC, MiFID

METATRADER-4, WEBTRADER

 

MOBILE TRADER

Minimum Size: $50

-Leverage up to 1:200

-Welcome Bonus up to 40%

 

► XEMarkets Account

 

» Compare Forex Brokers | » Compare Binary Brokers

 

◙ What is a Market Maker Broker?

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