Who are the market makers Forex?

 

According to the activity and the impact of currency exchange rates Forex participants can be divided into 2 groups: market-makers (video) and market-users (market-users, users).

In the role of MM. Speakers brokers or dealing centers, which take on the risks associated with the acquisition and possession in their own securities accounts or other assets in order to organize and sales. MM. act on the Forex (and other markets) as direct participants in commercial transactions.

Say Forex broker has an agreement with the stock exchange (ie, a large broker) to commit themselves to be held for a specified period of application of the same time with some difference between the Bid and Ask, ie buying and selling prices. During this MM. receives certain benefits, such as reduced commission on transactions. Thus, MM. - Free punter, who is in a special position.

Market-users are also financial institutions that carry out the request value of the currency pair. As a rule, small banks and FCCU that use rate, established for them a market maker trading. Market-users - not the most active market players. Although the volume of transactions on the stock exchange may be sufficiently large proportion of individually insignificant.

MM. determine the market prices for the market-users, while the latter may or may not take these quotes. Ie MM. quote rates (as would "do" her, make price), and market-users take it (take price).

Trader and final quotation

Quotes Trader trading terminal is the ultimate course of the currency pair when the primary quotation (course) has been taken of the market-user (broker or dealer) at a major bank (market maker). Therefore, quotes from different brokers may vary - for MM. they are also different. Dilinogovy Centre (broker) has the legal right to make their own changes obtained quotes, favorable to him (not a trader). This is normal. That is why before opening an account with a broker (DC) will correctly read carefully the terms of the trade broker.

By the way, compare quotes from reliable Forex Brokers (Forex4you, Alpari and InstaForex) and you'll be pleasantly surprised.

How do market makers Forex?

MM. do the following operations on the stock exchange:

1. fulfill customer orders your broker, and only in some cases - trade for their own account.
2. act as intermediaries, taking a profit on the difference between buy and sell prices (spread).
3. buy and sell currency.

Ie, MM. required to show the price of their purchases and sales. In fact, the exercise price of orders MM. becomes public. The most favorable purchase price and sales are automatically moved to the top (the top) and the queue will be performed the very first computer.

Every market has its own market-makers. One broker may be one or several MM. Whose quotes broker can offer to their customers. Of the world's major MM. can be called Barclays Bank, Deutsche Bank, PBS, Mizuho Bank, Chase Manhattan Bank, Citi Bank, Union Bank of Switzerland.

Features pricing

Some Forex brokers can slightly shift the price, acting in their own interests. It is legal, though not quite fair to the traders, customers of the broker. Although these changes are small, just a couple of points, you can imagine how much profit can be obtained, if traders are large lots - of 10 or higher.

The second thing that happens sometimes on the exchange - during important news trader sees in his trading terminal, there is no connection or quote prices upon request. Thus, the broker insures itself against sudden movements of the course, the trader did not go as low, unprofitable broker. In this case it is better to wait for reducing the volatility of the market, and then quietly open position. Some traders until the news put pending orders.

Market maker Forex - Desired and marketable player in the market. Knowing the characteristics of his work, the trader improves the understanding of the market and, therefore, can increase their profits.