DMA Forex Brokers

DMA Forex Brokers

In forex, direct market access (DMA) is a term used in describing the method by which traders obtain pricing and get their trade orders delivered and executed directly by the liquidity brokers. In other words, a DMA forex broker will give its FX traders direct link to the interbank market without the order and execution process passing through their dealing desk.

 

Best DMA Forex Brokers 2017:

The following table provides a list of our recommended Direct-Market-Access forex brokers. For more information or account details click on the review link.

Broker Info Bonus US Traders Open Account
HotForex Spread: 1 Pip
Leverage: 1:500
Minimum Deposit: $50
Demo Account: Open
Visit BrokerRead Review
ThinkForex Spread: 0.2 - 1.5 Pups
Leverage: 500:1
Minimum Deposit: $250
Demo Account: No
10% Ongoing bonus Visit BrokerRead Review
FXCM (Forex Capital Markets) Spread: 1 Pip
Leverage: 1:200
Minimum Deposit: $50
Demo Account: No
NA USA AllowedVisit BrokerRead Review
Forex4You Spread: 2 pips
Leverage: 500:1
Minimum Deposit: $10
Demo Account: No
25% Welcome Bonus! Visit BrokerRead Review
TradersWay Spread: 1 Pip
Leverage: 1000:1
Minimum Deposit: $1
Demo Account: No
100% First Deposit Bonus! Visit BrokerRead Review
LiteForex Spread: 1-2 pips
Leverage: 1000:1
Minimum Deposit: $1
Demo Account: No
Visit BrokerRead Review

What Does DMA Mean?

dma forexDirect market access means just what the term implies: traders get direct access to the liquidity providers. To understand this term fully, it is important to describe the mechanism by which pricing is obtained in the market, and the process by which a trader’s order leaves his computer and gets implemented to show up on the platform as a trade position.

How Does DMA Work?

The process starts with the price displays on the platform. Several premier banks who constitute the liquidity providers stream prices directly into the platform of the DMA forex broker. Traders thus are able to view these prices as well as the available market depth. The order is then filled with one of these liquidity providers at the best possible price, but usually with a small mark-up on the side of the DMA forex broker. Orders are fulfilled at market execution, which essentially is at the price that the currency pair is at when the order hits the servers of the liquidity providers. It may not necessarily be at the displayed price due to quick price changes, variable spreads and the trader’s internet connection speed. However, there are no requotes. So DMA forex brokers offer only market execution, spreads are always variable with a 5-digit pricing model, and also provide depth of the market book access as an optional feature.

So in a nutshell, a true DMA forex broker will:

–       Market executions without re-quotes.

–       Provide an anonymous, trading environment which enables traders to deal on neutral prices, have the same access to the order book, and view the true market depth.

–       Provide pricing which is based on variable spreads reflects demand and supply as well as volatility and market volume. This also prevents re-quotes as is often the case in fixed spread platforms.

–       Provide a trading environment which is free of conflicts of interest (no dealing desk or counterparty trading) and is independent of account size or trade volume.

 

DMA Forex Brokers: The same as STP or ECN Brokers?

The description that has been given above seems to indicate that DMA forex brokers offer the same model as STP brokers or ECN brokers. There are some subtle differences. All ECN brokers offer DMA (Direct Market Access), but not all STP brokers offer DMA.

It is essential to know that when talking about a direct market access broker, you should know that there is a difference between a DMA forex broker which offers an ECN model of forex as opposed to a DMA forex broker which offers a STP model. These differences are seen in terms of spreads, executions, fees and account deposit requirements.

DMA forex brokers with an ECN model are seen to have a cheaper fee structure than DMA forex brokers with an STP model. This is because they do not charge commissions, instead making their money by marking up the prices obtained from liquidity providers. Sometimes, DMA forex brokers charge monthly fees, or fees which penalize traders for not meeting up with a certain trade volume in a monthly cycle.

Advantages of Using DMA Forex Brokers:

There are numerous advantages in using DMA forex brokers.

a)    There is no discrimination against trading styles. Scalpers, who usually have raw deals in the hands of market makers, are welcomed with open hands by DMA forex brokers.

b)    There are no re-quotes whatsoever. If you have tried taking advantage of a news trade spike and kept getting requotes from your broker, you would know how frustrating this is, not to mention the risk of being filled at a bad price.

c)     Your broker actually works for you and not against you due to the removal of circumstances that promote conflict of interest.

d)    Even though spreads are variable, they do not get so wide. Spreads vary, but are contained within a certain band.

Disadvantages:

There are few disadvantages.

a)    If you do not trade often, you could be penalized for account inactivity.

b)    The account deposit requirement can be quite steep.

c)      Some traders just love fixed spreads. If you are one of these traders, then DMA forex brokers are not for you.

We have a table that shows you the top DMA forex brokers in the market today. Feel free to consult the table to make your choice of a DMA forex broker.

Adam

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Adam is an experienced financial trader who writes about Forex trading, binary options, technical analysis and more.

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