Most of the people who withdrew from the Forex market had different reasons for their decision. The most common reason people stop trading is the disappointment of losing large sums or the poor quality of services offered by Forex sites. It is true that 90% of people who trade Forex lose, but with perseverance and determination, they can become one of the other 10%.
The most important aspect of a Forex trading company is its relationship with the market. There are a large number of Forex brokers who are only representatives of other sites and brokerage companies. Therefore, the differentials imposed by these sites for transactions are greater compared to those of direct merchants, and it is normal, as long as this is the profit of the respective site.
The key factor in finding the best Forex site is determining whether the respective site or company can trade directly on the forex market. Finding those brokers is simple. Just look at the respective site that offers DMA trading options, and if it is approved for intermediate direct transactions.
What is DMA?
DMA stands for Direct Market Access, and the few sites that can trade this way will display this authorization with great pride. DMA Forex Brokers are the main Forex companies, and if you can find such a company, it will have numerous advantages.
- Small leverages and reduced commissions
- The smallest spreads in the Forex world
- The possibility of selling currencies directly, allowing you to win in a declining market
- Placing orders directly in the stock market records
- Direct and continuous trading with subscription function
With DMA Forex Brokers, an investor will combine the advantages of direct trading with the leverage effect, having the possibility to earn decent money with reduced risk.
A DMA Forex does not promise millions of dollars a week for traders. Such a site does not really need a presentation as it is only used by professional traders with long experience in Forex. For this reason, DMA Forex Brokers will always tell you the truth about your chances of winning or losing in the market.
Direct Sites offer reduced spreads, as their earnings are based on the number of transactions and the size of the amounts traded. In other words, while a small site representing a DMA Forex trader needs to attract as many investors as possible to make a profit, the DMA site only needs a small number of professional traders with significant financial resources at their disposal. Those sites are designed for people who really know their way in the Forex industry.
How does a DMA broker work?
Direct Market Access technology provides the trader with direct access to the trading floor. All orders are immediately sent to liquidity providers, while the broker practically does not interfere in the trading process. Orders of this type are executed as quickly and transparently as possible. Each order enters the Depth of Market as a result of which supply and demand for certain goods are created.
The first DMA Forex brokers appeared in 1969. However, this phenomenon began to gain popularity relatively recently. The technology has not yet become widespread, but experts are already actively using it for regular enrichment.
Unlike most trading methods, this option does not involve the direct intervention of an intermediary. The company only provides access to the site, provides advice and software. The role of a broker on the exchange is very limited, as a result of which commission charges become much smaller.
The system usually involves investment, pension, and joint funds. Banks and reliable brokers also enter the site, providing high liquidity. The main characteristics of DMA and ECN accounts are almost the same. In both cases, a trader can enter the global marketplace and carry out trading operations bypassing intermediaries. At the same time, the key difference is the commission, which is included in the spread when using Direct Market Access.
Advantages and Disadvantages of DMA Companies
Practice shows that the best brokers provide their clients with the opportunity to enter the international market. At the same time, transactions using DMA technology have not only adherents but also opponents. To understand the essence of the issue and make his own decision about choosing an intermediary firm, a trader should study the positive and negative aspects of this phenomenon.
DMA broker has the following advantages:
- Extremely high liquidity, which ensures tight spreads and instant order execution.
- Trading and pricing are completely transparent. A trader can observe trading operations and track the number of orders to buy or sell an asset.
- After the investor has transferred finances to the broker’s account, he can immediately start trading transactions. Fraud and fraudulent activities are practically excluded because the intermediary does not participate in the execution of orders.
- There are no limitations on the size of the transaction or its duration. A trader can use any trading methodology and work with different investment assets.
- The company and the client have no conflict of interest. It is beneficial for the intermediary that his trader receives good earnings and pays commissions.
- Access to technology is not easy to obtain, so only wealthy firms have access to the market. The presence of large capital and the necessary adaptations indicate that the company earns well and provides quality services.
If a trader decides to work with a broker whose trading is as transparent as possible, he should take into account several flaws of this system. First of all, there is a lot of volatility in the market, and in case of a mistake, the analyst will lose a large amount. The entry threshold usually starts at $50,000, while access to the interbank market is already available from $100. Thus, only professional and wealthy traders usually work through Direct Market Access technology.