What is a Market Maker Forex Broker

Market Makers Forex Brokers

💼 Market Makers in the Foreign Exchange Market

Market Makers are brokers who trade Forex, commodities, stocks, and indices by creating their own market. They are also known as Dealing Desk Brokers (DD) or Agents.

 

What is a Market Maker Broker?

A Market Maker is a broker that creates a market within the market. It always takes the opposite position to that of the client. This means when a client opens a trading position, the broker instantly becomes the counterparty.

◙ Client goes Long ↔ Market Maker goes Short

◙ Client goes Short ↔ Market Maker goes Long

 

Two Types of Market Maker Brokers

There are two types of Market Makers:

(1) Retail Market Makers — financial companies serving 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 position themselves between opposite client orders and make money by charging the spread between the bid and ask prices.

Example:

  • Client-A buys 100,000 Euros against USD at 1.2000

  • Client-B sells 100,000 Euros against USD at 1.2004

The broker earns 4 pips on 100,000 USD without risk. However, if a large client order doesn’t have an equal opposite order, the Market Maker faces market risk.

 

Cost of Forex Trading with a Market Maker Broker

Market Makers charge no commissions; they earn only from spreads.

Spreads between ask and bid prices tend to be higher. Current minimum spreads offered by Market Makers:

  • EUR/USD: 1.4 pips

  • GBP/USD: 2.0 pips

  • USD/JPY: 1.8 pips

These spreads are noticeably wider than those offered by ECN and STP Forex brokers.

 

Advantages When Trading Forex with a Market Maker

(1) Low minimum account requirements, often as low as $100

(2) Welcome bonus promotions, usually credit bonuses, sometimes withdrawable

(3) Free bonus offers, often up to $100, which help beginners test skills in real market conditions

(4) Easy-to-use trading platforms, including web-based traders

(5) Wide asset selection, especially in stocks and indices

 

Disadvantages When Trading Forex with a Market Maker

(1) Very expensive spreads

(2) Slow order execution, not suitable for automated-trading

(3) High slippage on order execution

(4) Restrictions in scalping practices

 

Final Thoughts

For many traders, trading against their broker may not be ideal. Market Makers are generally a good choice for advanced or professional traders. They charge wider spreads and experience delays during news releases, making news trading or scalping impractical. However, Market Makers are a suitable option for beginners and semi-advanced traders due to their easy platforms, broad asset selection, and low minimum account requirements. 

🔗 More: » Compare Forex Brokers

 

◙ What is a Market Maker Broker?

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