Who offers direct market access in forex trading?

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There are two types of DMA (direct market access) Forex trading and both are very different and not at all like DMA equities trading.

First off, there is DMA FX trading on exchange with futures.

Most FX futures are denominated in USD and traded through exchanges like the CME. You can see more info on the CME FX Futures here.

FX futures are set in lot sizes and deliverable at a certain date in the future. So the price will be slightly different from the underlying mid-market because the futures price is based on the cost of carry (determined by the prevailing currency interest rates).

When trading on exchange you can see the order book (in lots) and work bids and offers inside the market prices, just like trading stocks on the stock market.

When trading on exchange FX, you can also trade FX options – to do so you need a futures broker (not a CFD broker).

The other type of DMA FX trading is through liquidity pools.

For spot FX there is no central market – foreign exchange prices are determined through various liquidity providers.

Platforms like Currenex offer a form of DMA, whereby the platform aggregates orders from multiple brokers showing liquidity depth. Although this is still an OTC market.

You can work orders inside the price, but it’s not as functional as an established exchange.

Also, when trading SPOT FX, your positions are rolled T+1, rather than settling at a set date in the future.

Things to consider when trading FX DMA:

  • With DMA FX trading there will be commission added to the trades.
  • With CFD FX brokers and spread betting commission is generally built into the price making it easier to calculate P&L.
  • It may not be work trading DMA FX if you only have a small account.
  • DMA brokers tend to only offer accounts with competitive pricing to large private and institutional accounts.

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Richard started the Good Broker Guide in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.