In the global foreign exchange market, Market Maker Forex Brokers fulfil a useful role. They create liquidity and contribute to market efficiency.
Choose your quick section of our best Market Maker Forex Brokers below
Our 10 Best Handpicked Market Maker Forex Brokers Revealed:
There are many unscrupulous Market Makers and scam forex brokers who give this type of broker a bad reputation. Here is our list of reputable Market Makers that we can recommend.
AvaTrade
Founded 2006
Regulated ASIC, BVI, CBI, CySEC, FSA(JP), FSC, FSCA
Headquarters Ireland
Tradeable assets Currencies, commodities, indices, stocks, bonds, crypto, futures
Trading platform AvaOptions, AvaSocial, AvaTradeGo, MT4, MT5
Trading desk Market Maker
Minimum deposit $100
CMC Markets
Founded 1989
Regulated ASIC, FCA
Headquarters United Kingdom
Tradeable assets Currencies, commodities, indices, stocks, bonds, crypto, futures
Trading platform CMC Web Platform
Trading desk Dealing Desk, Market Maker
Minimum deposit $0
eToro
Regulated ASIC, CySEC, FCA, MiFID
Headquarters Cyprus
Tradeable assets Currencies, commodities, indices, stocks, crypto
Trading platform eToro platform
Trading desk STP, Market Maker, NDD
Minimum deposit $200
Exness
Founded 2008
Regulated CySEC, FCA, FSA(SC), FSCA
Headquarters Cyprus
Tradeable assets Currencies, commodities, indices, stocks, crypto
Trading platform MT$, MT%
Trading desk Market Maker, NDD
Minimum deposit $10
FXCM
Founded 1999
Regulated ASIC, FCA, FSP
Headquarters United Kingdom
Tradeable assets Currencies, commodities, indices, stocks, crypto
Trading platform MT4, NinjaTrader, Trading Station, Zulutrade
Trading desk DD, Market Maker
Minimum deposit $300
FXTM
Founded 2011
Regulated FCA, CySEC, FSCA, FSC (Mauritius)
Headquarters Cyprus
Tradeable assets Currencies, commodities, spot metals, stocks, indices, crypto
Trading platform MT4, MT5
Trading desk Market Maker
Minimum deposit $10
FXVC
Founded 2011
Regulated CySEC, FINMA, FSCA, IFSC
Headquarters Cyprus
Tradeable assets Currencies, commodities, indices, stocks, crypto
Trading platform Proprietary
Trading desk Market Maker, NDD, STP
Minimum deposit $250
HYCM
Founded 1977
Regulated CIMA, CySEC, FCA, SVGFSA
Headquarters United Kingdom
Tradeable assets Currencies, Commodities, Indices, Stocks, Crypto, Futures
Trading platform MT$, MT%
Trading desk DD, Market Maker
Minimum deposit $100
JustForex
Founded 2012
Regulated Pending
Headquarters Belize
Tradeable assets Currencies, commodities, indices, stocks, crypto, futures
Trading platform MT4
Trading desk ECN, NDD, STP
Minimum deposit $1
XTB
Founded 2002
Regulated CNMV in Spain, CySEC, FCA, IFSC, KNF
Headquarters Poland
Tradeable assets Currencies, commodities, indices, stocks, bonds, crypto, futures
Trading platform MT4, xStation 5
Trading desk MM, STP
Minimum deposit $0
What is a Market Maker forex broker?
A Market Maker is an individual, brokerage or institution that buys and sells large amounts of a particular asset on the financial markets. This is done by continuously quoting bid and ask prices that are available to other traders on a trading platform such as MetaTrader 4.
Market Makers are also known as liquidity providers because they keep financial markets liquid. Basically, Market Makers ensure the financial markets run smoothly with high liquidity and they make profits from the bid/ask spread.
A large majority of registered forex brokers are Market Makers. They display a buy and sell quote and execute trades at those prices rapidly which provides retail forex traders with a straightforward and simple way to trade currencies and other financial assets.
How do Market Makers make money?
Market Makers carry the risk of buying a financial asset that may devalue. To compensate for this risk, Market Makers maintain a spread on the assets that they enable retail traders to trade.
Market Makers make money by charging higher ask prices (selling price) than bid prices (buying price). The difference is the spread which compensates Market Makers for the risk involved in such trades. The risk is the price movement against the Market Makers on trading positions.
Example
A Market Maker may offer to purchase 200 equities from you at $10 each (the ask price). The broker than offers to sell the equity to a buyer at $10.02 (the bid price).
The $0.02 difference is very small per trade but in high-volume trading, the Market Makers profits rack up to large amount.
What is a bid/ask spread?
The bid/ask spread is the difference between what the buyer’s price and the seller’s price. In other words, what the buyer is willing to pay for a financial asset and what a seller is willing to accept to sell it.
The bid price represents demand and the ask price represent supply for an asset.
What is the difference between Market Makers and ECN/STP brokers?
The difference is Market Makers don’t cover positions on liquidity providers and is obliged to pay for clients’ beneficial trades with its own money. So, a Market Makers earnings are a clients losses.
With the ECN/STP trading model, the brokerage sends all orders directly to the liquidity providers and doesn’t bear the risks of clients’ trading. ECN/STP forex brokers don’t intervene with the order execution process. They merely makes money on trade turnover and it’s in their best interest that clients don’t lose their money and trade more.
The majority of forex brokers mix these models and pass only part of their clients’ orders to liquidity providers. Some brokers pass orders to the liquidity pool themselves as Market Makers and also offer separate ECN/STP trading accounts with a guaranteed transmission of orders to the interbank market. This approach combines an A-book execution and a B-book execution which spreads the risk for forex brokers.
4 reasons to use Market Maker Forex Brokers
There is room in the financial markets for the two main business modes used by forex brokers, namely the Straight Through Processing (STP) and Market Making (MM) models.
STP forex brokers transfer all their orders directly to a pool of liquidity providers and take a small cut on every trade. Market Maker brokers cover the orders internally with their own liquidity and only cover high risk orders with external liquidity providers. By using their own liquidity, Market Makers profit when clients lose money and lose money when clients profit.
- Market Makers have more flexibility
The benefit of using a Market Maker forex broker is if there is mispricing or a technical error executing an order, the broker can rectify the situation whereas an ECN/STP broker doesn’t have that flexibility. This is because Market Makers use internal liquidity.
- Market Makers provide full recourse
There is no middleman involved in the Market Making model; you trade directly through the brokerages using sophisticated platforms like MetaTrader 4 and MetaTrader 5. If anything goes wrong, your MM forex broker can provide you full recourse.
- Market Makers direct liquidity to their clients
ECN/STP brokers transfer orders directly to liquidity providers who act as Market Makers. MM brokers execute orders for their clients via an electronic trading platform which means MM brokers bring direct liquidity to their clients.
- Market Makers build relationships
Market Maker forex brokers tend to market themselves to beginner and intermediate traders who need time to gain experience and develop a disciplined trading strategy. You’ll find MM forex brokers offer welcome bonuses, training courses and a wealth of educational content on their site to help new traders hone their trading skills. MM forex brokers provide their clients with a valuable experience that goes beyond executing orders.
What you should know about Market Maker Forex Brokers
The main issue that Market Maker brokers are criticised for relates to conflict of interest exists. This is because MM brokers profit from their client’s losses. There are many dishonest MM brokers offering their services to retail brokers and lots of broker scams. For this reason, it’s extremely important that you ONLY trade currencies through a forex broker that is regulated by a top-tier authority.
MM forex brokers are often accused of price manipulation, disconnecting the price feeds, increasing the spreads, filling orders at unfavourable price levels and even resorting to changing client orders without their consent. It is also common to experience a significant number of re-quotes and large slippages from MM brokers during times of low liquidity in the forex market.
Yes that happens, but those are unscrupulous retail brokers who give forex trading a bad reputation. Reputable forex brokers who are regulated by top-tier authorities never go out of their way to make you lose money. It’s not in their interests to have clients money and cancelling their accounts.
Rather, reputable and trustworthy Market Maker brokers should provide their clients with the best possible prices, ensure fast execution, honour all pending and market orders and pay profits when clients withdraw from their accounts.
Conclusion
They also make the process of matching individuals traders to buy and sell currencies seamless with sophisticated trading platforms. A large portion of retail forex brokers are Market Markets but many of the reputable brokerages also offer their clients an ECN account.
It’s crucial that you only trade with a Market Maker broker that is licensed and regulated by a top-tier authority and is regarded as honest, transparent and safe to use.
Forex Trading Africa Disclaimer
Forex is a complex instruments and trading forex involves a high risk of losing money rapidly due to leverage. You need to understand how forex trading works and decide whether you can afford to take the risk of losing money on trade orders that do not go your way.
Forex Trading Africa annually reviews brokers regarded as the best in the world and provides information on the products, fee structure, market analysis and service they offer. We aim to provide important information for you to base your decisions on when choosing the right forex broker for your needs.