In this article, We learn about “Direct Market Access (DMA) “.Let’s Go!
DMA, , or Direct Market Access, is a type of trade execution that gives traders direct access to interbanks, enabling them to place trading orders with Liquidity Providers (LPs) .
Trading with a DMA account is ideal for Forex traders looking for maximum transparency and control.
While DMA accounts have direct access to liquidity, orders are still placed in the name of the broker (not the trader).
The broker basically acts as your “agent”, allowing you to trade directly from the LP, but from the LP’s perspective, they are still trading with your broker.
Think of it as your broker “vouching” for you.
Full Market Depth gives traders access to multiple levels of liquidity, allowing them to gain a deeper understanding of the market and control the best bid and ask prices for trading directly from liquidity providers.
DMA enables traders to submit buy or sell orders directly to the order book of the underlying market (OTC or exchange), bypassing all intermediaries.
For serious traders who need deep liquidity and control to take advantage of fast price opportunities.
This is a more flexible and transparent way of trading than traditional trading (often called OTC or over-the-counter trading).
With DMA, traders can trade directly on the exchange’s order book.
DMA traders can view orders directly on the books of the exchange they are working on and are charged on a commission basis rather than through the spread.
DMA is a great way for advanced traders to gain a more complete understanding of the market and see the best prices.
How to fill an order in DMA account?
Limit orders placed via DMA trades are immediately delivered to the execution location, where they actually become the bid/ask prices that other participants in the liquidity pool interact with.
Traders must have sufficient margin for limit orders at the time of entry and when a stop loss or limit is triggered.
Stop orders placed via DMA trade orders remain at the execution location and are subject to price triggering before being exposed to the liquidity pool.
How does CFD and DMA trading work?
DMA allows you to trade based on underlying market price and depth, but what you actually receive when you trade is a CFD from the CFD provider.
Here’s how it works:
- DMA shows the best bid and ask prices available for a specific market, as well as further prices on both sides of the order book
- You place an order and your CFD provider will immediately conduct a margin check to ensure you have sufficient funds to cover the margin for your proposed trade
- If the margin check is met, the order will be placed on the market and a parallel CFD will be created between you and your CFD provider.
So when you trade at the market price, you do not acquire any ownership rights in the shares or currencies that form the underlying of the CFD.
What is the difference between DMA and ECN?
Both models have a lot of similarities in terms of pricing. Both provide clients with access to the interbank market, creating tight pricing and deep book transparency.
In a typical anonymous ECN model, individual customers must obtain their own line of credit from a traditional Prime Broker or Prime of Prime provider in order to participate in an ECN.
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