In forex trading, there are various types of brokers that investors can use. Among these various types of forex brokers, market makers play a pivotal role in the forex market by providing liquidity and executing trades for their clients.
These brokers act as the counterparty in trades in order to fulfil orders. This model of order fulfilment has its pros and cons. Choosing the right market maker broker is crucial to making the best out of this execution model. In this article, we will look at a list of some of the best market maker forex brokers in the industry.
What Is a Market Maker Forex Broker?
Market makers are also known as dealing desk brokers. These brokers provide liquidity to the market by quoting both the buy and the sell prices. They do this by operating a dealing desk which allows them to execute trades within their own liquidity pool. They act as the intermediary between the interbank market and the traders. Market makers are willing to buy when the trader wants to sell and willing to sell when the trader wants to buy. This means the broker effectively takes the opposite side of a client’s trade.
Notably, this model allows for faster execution speeds and often fixed spreads. This can be advantageous for certain trading styles. However, it’s essential to understand the potential conflict of interest that may arise, as market makers profit from the spread and take the opposite side of their clients’ trades.
Key Factors to Consider When Choosing a Market Maker Broker
When selecting a market maker broker, consider the following factors:
- Regulation – Ensure the broker is regulated by a reputable financial authority. Organisations like the FCA, the ASIC, the CySEC, and the NFA provide some of the best regulatory frameworks in the industry.
- Trading Platforms – The broker should offer user-friendly and feature-rich trading platforms. MetaTrader 4 (MT4) and MetaTrader 5 (MT5) are industry standards. They are known for their charting tools, technical indicators, and automated trading capabilities.
- Spreads and Commissions – Compare the spreads offered by different brokers. While market makers typically don’t charge commissions, their revenue comes from the spread. Look for brokers with competitive spreads, especially on major currency pairs.
- Range of Market Products – Consider brokers that offer a deep collection of market products to ensure you can diversify your portfolio as you see fit.
Using this criteria, let’s look at some of the best market maker forex brokers.
List of Some of The Best Market Maker Forex Brokers
XM
XM is a popular market maker broker that operates its own dealing desk. This means that XM quotes its own bid and ask prices. The broker caters to traders worldwide, offering over 1,000 trading instruments. On this broker site, traders gain access to CFDs on forex, equity indices, shares, cryptocurrencies, commodities, metals, stocks, and energies. To trade these market products the broker offers several trading platforms including MetaTrader 4, MetaTrader 5, and XM’s trading app.
The spreads on the XM.com site are competitively low with three account types available. The Standard account on this broker site has a spread that starts from as low as 1.6 pips for major currency pairs with no commission charged. In comparison, the XM Ultra Low account has even lower spreads from as low as 0.8 pips, also without commissions. Finally, the Shares account charges commissions depending on the share being traded and the size of the trade.
Regarding regulations, XM has oversight from some top organisations alongside other financial institutions. It operates under the regulation of the CySEC in Cyprus, the ASIC in Australia, the DFSA in Dubai, and the FSC in Belize.
XTB
XTB is another well-respected market maker broker, known for its user-friendly platform and tight spreads. As a market maker, XTB provides liquidity by quoting its own bid and ask prices. The broker offers a wide array of financial instruments, including CFDs on forex, commodities, cryptocurrencies, indices, stocks, and ETFs. It also allows traders to access stocks and ETFs as real underlying assets.
XTB stands out with its proprietary trading platform, xStation 5. It is highly regarded for its intuitive design, advanced charting tools, and real-time performance analytics. When it comes to spreads, XTB offers competitive rates. Its standard account features tight spreads starting from 0.8 pips on major currency pairs, with no commission fees.
On another note, XTB is a regulated broker with licenses in various jurisdictions. This broker has regulations by the CySeC in Cyprus, the FCA in the UK, the KNF in Poland, and the FSC in Belize.
Exness
Exness is a reputable broker recognised for its advanced trading tools and competitive spreads. While Exness does not consider itself a market maker, it provides liquidity and shapes market sentiment and trends. It relies on its own sophisticated market, risk, pricing, and execution models. The broker offers a diverse range of tradable instruments, including CFDs on forex, indices, stocks, commodities, and cryptocurrencies. The trading platforms available to use include MetaTrader 4, MetaTrader 5, Exness Trader app, and Exness Terminal.
Exness provides a highly competitive spread structure, with several trading accounts available. Its standard account offers a spread starting at 0.2 pips for major currencies and no commissions. In contrast, its standard cent account offers spreads from 0.3 pips for major currency pairs with no commission required. On the other hand, the Raw Spread account features the lowest spreads possible starting from 0.0 pips with a commission of up to $3.5 per sie per lot. The Zero account has zero spreads (0.0 pips) on the top 30 instruments plus a commission from $0.2 per side per lot upwards. Finally, the Pro account comes with ultra-low spreads starting from as low as 0.1 pips with no commission paid.
In terms of regulatory oversight, Exness operates under multiple reputable regulatory bodies. These include the CySEC in Cyprus, the FCA in the UK, the CMA in Kenya, and the FSC in Mauritius, among others.
IG
IG is a well-established broker that has been serving traders globally for decades. It is partly a market maker as it uses a combination of a dealing desk and STP (straight-through processing). As such, it does fulfil some orders through its in-house dealing desk. The broker offers an extensive range of over 17,000 financial instruments. Particularly, this broker allows its traders to access CFDs on forex, indices, commodities, cryptocurrencies, thematic and basket assets, shares, options, bonds, and ETFs.
The broker offers a variety of trading platforms including MT4, L2 Dealer, ProRealTime, TradingView, and its own IG Trading Platform. The spread structure on this broker site is very straightforward. IG offers highly competitive spreads, with some major currency pairs trading as low as 0.6 pips without additional commissions. This makes IG an attractive choice for many traders.
In terms of regulation, IG operates under the regulation of a variety of financial organisations. These include the FCA in the UK, the ASIC in Australia, the BaFin in Germany, and the FSCA in South Africa, among others.
City Index
City Index is another market maker broker with a deep collection of market products. With this broker, investors can access over 5,000 instruments. These are from various global markets including forex, indices, commodities, shares, and bonds. This diversity allows traders to spread their investments across various assets.
One of the standout features of City Index is its robust trading platforms. It offers TradingView, MetaTrader 4, WebTrader, and mobile trading apps. These platforms are designed to provide a seamless trading experience with advanced charting tools, technical indicators, and fast execution speeds. Further, City Index provides competitive pricing on its various accounts.
There are two tradings accounts available which include the MT4 account and the Standard account. The standard account is accessible via the company’s web-based platform and TradingView. This account has spreads that start from 0.5 pips for major currency pairs with no commission charged. In comparison, the MT4 account has an average spread of 0.8 pips for major currencies with no commissions. As the name suggests, the MT4 account is accessible via MetaTrader 4.
Finally, City Index has an impressive regulatory background, being one of the most heavily regulated companies. Its parent company, StoneX, has regulations by the ASIC, the FCA, and the CySEC, among others.
AvaTrade
AvaTrade is another prominent market maker broker that operates its own dealing desk. This comes with many benefits. Since market makers provide pricing in-house, spreads are kept as low as possible and remain fixed on AvaTrade. The broker provides a wide selection of tradable instruments totalling over 1,250 assets. These include CFDs on forex, stocks, commodities, indices, cryptocurrencies, ETFs, and bonds.
As mentioned, AvaTrade offers fixed spreads starting from 0.9 pips for major currency pairs with no commission charged. To access the various market products, the broker offers MetaTrader 4 and MetaTrader 5, alongside its own AvaTradeGo. Further, this broker holds regulatory licenses from a variety of organisations. It is regulated by the Central Bank of Ireland, the CySEC, the ASIC, and the FSCA.
Advantages of Market Maker Brokers
- Fast Execution – Market makers often provide faster execution speeds as they act as the counterparty to trades.
- Consistency – Market makers are able to control their own pricing which allows them to keep spreads consistent, providing more predictable trading costs.
- Accessibility – These brokers cater to traders of all levels. Some traders might prefer the simplicity of the approach that market makers take in order execution.
Disadvantages of Market Maker Brokers
- Conflict of Interest – Since the broker profits from client losses, there can be a potential conflict of interest.
- Requotes – In volatile market conditions, market makers may issue requotes, where the requested price is no longer available.
Conclusion
Market maker brokers play an essential role in the forex trading ecosystem. They offer certain advantages, such as fast execution and fixed spreads. However, it’s essential to be aware of the potential conflict of interest that arises. For the best experience with market makers, choosing the right forex broker is a critical decision for any trader.
The best broker for each trader depends on their trading goals, experience level, and preferences. The brokers we featured here are only a few of the popular market makers in existence. It is not an exhaustive list. As such, we encourage each reader to do their own research and pick the broker that best meets their needs. Remember, forex trading involves a lot of risks and requires a lot of discipline.
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