What is direct market access in forex trading and how does it work?
Direct market access (DMA) is a type of FX execution that offers traders access to the physical market without intermediaries. Traditionally, FX trading is conducted through a forex broker, who will request quotes from exchanges and market makers, and then present the best price to their client. But DMA is an electronic trading mechanism that enables you to see the different orders and prices yourself, and then place your trade accordingly.
It is important to note that while you are trading based on underlying market prices and depth, what you actually receive when placing a trade is a CFD from us. Forex DMA works like this:
- DMA displays the best bid and offer price available for a particular market, plus further prices on either side of the order book
- You place an order, and we instantly conduct a margin check to ensure you have sufficient funds to cover the margin on your proposed trade
- If the margin check is successful we place an order in the market and, at the same time, create a parallel CFD between you and us
Forex Direct is suitable for advanced FX traders only.