Complete Guide to DMA/STP Forex Brokers
There are so many different options for new Forex traders. It can be rather confusing if you don’t understand what it all means. So we’ll spend a while looking at DMA/STP Forex brokers, and give you enough information to decide whether this will be one option for you.
What is DMA, with regards the Forex market?
DMA, stands for Direct Market Access. And this is one type of broker you can choose to use for your trading transactions. With DMA Forex brokers, clients can trade directly with leading Forex Banks or Market Makers. Trading in this way offers the opportunity to receive the best possible price in the market at a specified time, without having to use a dealing desk.
In order to fully understand what DMA means it’s best to look at the way in which pricing is obtained in the market. And how your order will be processed and eventually show up on the platform as a trade position.
How DMA works
The first step of the process is for the price to appear on the platform. There are a number of banks, also known as liquidity providers, that stream their prices directly into the platform of various DMA Forex brokers. Traders can see these prices as well as the available market depth. Orders are filled with one of the liquidity providers, at the best price possible. However, there is often a small mark-up on the side of the DMA Forex broker. When the order hits the liquidity provider’s servers it is fulfilled. This is called market execution. Obviously prices can change very quickly in the market, so the execution price may not necessarily be visible once the order has been filled. Variable spreads and the speed of the internet connection are also factors that can influence what price is displayed, after the trade has been executed.