Trading Forex Market through Market Makers
Traders can trade forex currency market through two different types of brokers, as Market Makers and Electronic Communication Networks (ECNs). Each method has pros and cons; and the type of broker that suits one depends on his trading style, opted currency pairs, margin requirements, risk tolerance etc.
When forex trading is done through market maker, the market maker is simply trading against us; whenever we sell they buy and whenever we buy they sell. They fix ask and bid prices, which may greatly vary with different market makers and currency pairs, and their profit is the difference between this ask and bid prices. As market makers offer fixed spreads, they add to the liquidity of market, and thus less favor scalpers who look for volatility. Most market makers offer free (and powerful) forex currency software platforms, which offer charts, news and other market analysis tools to traders. Because of tight competition, market makers tend to offer tight spreads for liquid currency pairs. There are institutional forex market markers – who offer their service to banks, institutions and ECNs, and retail market makers who offer their services to retail traders.
Advantages of trading market makers include, 1) free advanced currency trading platforms, 2) fixed (and tight) currency spreads, 3) and increased liquidity. disadvantages include 1) worse ask and bid prices at times, 2) chance of high slippage on news releases, 3) less favorable for scalpers, and 4) possibility of currency price manipulation, and 5) possible conflicts as they are trading against us.
NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage
When forex trading is done through market maker, the market maker is simply trading against us; whenever we sell they buy and whenever we buy they sell. They fix ask and bid prices, which may greatly vary with different market makers and currency pairs, and their profit is the difference between this ask and bid prices. As market makers offer fixed spreads, they add to the liquidity of market, and thus less favor scalpers who look for volatility. Most market makers offer free (and powerful) forex currency software platforms, which offer charts, news and other market analysis tools to traders. Because of tight competition, market makers tend to offer tight spreads for liquid currency pairs. There are institutional forex market markers – who offer their service to banks, institutions and ECNs, and retail market makers who offer their services to retail traders.
Advantages of trading market makers include, 1) free advanced currency trading platforms, 2) fixed (and tight) currency spreads, 3) and increased liquidity. disadvantages include 1) worse ask and bid prices at times, 2) chance of high slippage on news releases, 3) less favorable for scalpers, and 4) possibility of currency price manipulation, and 5) possible conflicts as they are trading against us.
NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage
posted by NobleTrading at
10:20 AM
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