DMA Forex Brokers

Definition of an STP/DMA broker

An STP broker with Direct Market Access (DMA) aggregates prices from liquidity providers in the Forex interbank market and forward your trades directly onto these liquidity providers.

Three things to look for in a DMA broker:

• Always variable spreads
• Always market execution
• Always 5 digit pricing (fractional pricing)
• Optionally: depth of market access

Benefits of Direct Market Access

Tight spreads

Your broker aggregates prices from competing liquidity providers and shows only the best bid and the best offer. The more liquidity providers your broker works with, the greater the competition and the tighter the spreads.

In addition, fractional pricing also helps reduce spreads because it prevents brokers from rounding them up. Compare brokers with 5 decimal pricing.

Instantaneous execution

Your orders go directly to liquidity providers for execution at the prevailing market price. There are no dealing desk (NDD) and no re-quotes even during news events or data releases. This supports a broad range of trading strategies, including scalping, news trading and swing trading.

No conflict of interest

Brokers with a dealing desk (DD) make a market for your trades. They sit on the other side of your trades and, for this reason, profit when you make a loss. This can give rise to conflicts of interest if your broker has an interest in seeing your lose money.

In contrast, DMA brokers face none of these issues. They act as intermediaries rather than market markers and earn money from a mark-up they apply to the spreads rather than your losses. This aligns their interests with yours.

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