Market Maker Forex Brokers

 

Dec 18,  · Market Makers Strategy. Beginner Questions. The majority of amateur stock & forex market traders do a brilliant enough job of consistently f*cking things up all on their own. Epidot: You make out everyone is a thick as a plank thats why they lose? really as simple as that huh? ok.

What does that tell you? Read more about questionable forex broker practices here.

Market Wizards

In forex trading most deals are conducted over-the-counter (OTC). A forex broker acting like market maker quotes both a bid and a ask price in a currency pair. The broker sells to its clients when they want to buy and buys from its clients when they want to sell.

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Popular Latest Comments Tags. Routines and discipline make all the Forex brokers saw an opportunity and did what brokers do — provide access to a market for clients by providing reasonable terms that are both acceptable and convenient. Their chosen activity, however, was not exactly like a market maker in the stock world.

They were not selling title to an actual asset where ownership issues were involved. Market liquidity in the forex world, however, is never an issue, at least for major currency pairs. No market maker in this arena would ever have to worry about building an inventory of unsold shares and then wait for the opportune time to unload them on the market. In other words, there remains a basic conflict of interest for all market makers.

Unscrupulous brokers can easily manipulate spreads to their benefit over time, leaving their clients to accept their behavior or move on.

The market makers in the forex community of brokers, at least the vast majority of them, are legitimate and would never do anything like manipulating spreads to their immediate benefit. They are more concerned about pleasing and retaining their clients. Competition is too fierce, and regulators provide much more oversight in this day and age. Like it or not, however, ECNs, the other type of broker that passes orders straight through to their liquidity providers, waste little time in their marketing campaigns emphasizing that market makers trade against their clients in the back-office.

There are pros and cons for each broker set up, and these depend on what your individual needs happen to be. Each market maker competes for customer order flow by displaying buy and sell quotations that it will honor if acted upon in a timely manner.

Once an order is received, the market maker typically aggregates its net positions and immediately places an offsetting order in the market with its liquidity provider. This process takes place in mere seconds. In other words, a market maker does exactly what the term implies — it makes a market for the applicable currency pair, often without going to any trading floor or electronic exchange.

Nearly all forex brokers operate in this fashion for retail forex trading.