What is direct market access (DMA) in trading?
Many traders and investors prefer direct market access (DMA) because it enables them to deal directly onto the order books of major exchanges. Learn more about DMA and how you can access it with IG here.
What is direct market access (DMA)?
Direct market access (DMA) is a way of placing trades directly onto the order books of exchanges. DMA offers greater visibility of the market, while IG’s L2 Dealer technology aggregates prices from multiple exchanges. However, it is usually recommended for advanced traders only – due to the risks and complexities involved.
How does DMA work?
DMA enables you to interact with stock or currency exchanges directly – bypassing any aggregation of over-the-counter orders – so you can choose the price you want to deal at. With IG, you can access DMA in two ways:
CFD trading on shares and forex
CFD trading on shares and forex enables you to go long or short on prices without taking ownership of the underlying assets. When you place a trade, IG takes the position in the underlying market and you receive a CFD with us.
Share trading enables you to buy stock and take ownership of it. You’ll own the stock for as long as you hold it. When placing an order to buy, our smart technology will show prices aggregated from multiple exchanges and highlight the ‘best’ price.
CFD trading DMA example
Let’s suppose that you wanted to trade shares via DMA. You would search the L2 Dealer platform for the best price available to either buy or sell the underlying market. Then, you would place an order and your broker would do a quick check to see if you had enough margin to open the position. The necessary checks take a fraction of a second, after which your order will be placed directly onto an exchange’s order books. There, you can see other market participants’ orders and gauge market sentiment for your chosen asset.
If you want to buy shares outright via DMA, you would search the L2 Dealer platform, the share trading web platform or the mobile app for the best price available to buy. You would need to have the full amount of money required to open the position in your account. As with trading, your order will be placed onto an exchange’s order books where you can see other activity and analyse market sentiment.
What markets can you trade with DMA?
Over 13,000 shares
Execute your orders against multiple liquidity venues, including primary exchanges, multilateral trading facilities (MTFs), dedicated market makers and dark pools.
More than 80 forex pairs
Deal without a middleman and get better pricing, higher liquidity, faster execution and more control over trades.
How to start trading with direct market access
To start trading with direct market access:
Pros and cons of DMA trading
Pros of DMA
All orders are visible to the entire market, which enables market participants to effectively gauge market liquidity.
DMA creates an equal playing field between different market participants – making it possible to see other traders’ movements and effectively gauge market sentiment.
Prices are gathered from a wide selection of global banks, stock or currency exchanges and liquidity providers, securing competitive prices.
Cons of DMA
There is a possibility of increased risk due to DMA’s complex nature. This is why it is usually recommended to advanced traders only.
While a smart order router provides far better DMA liquidity than single order exchange offers, it is still less than when trading over the counter with IG.
DMA is generally stricter, with rules on repeat dealing, or deal rejections if trading outside the normal market size.
What is the definition of DMA in trading?
DMA in trading is short for ‘direct market access’, which describes dealing directly onto the order books of major exchanges through a trading (DMA) broker. DMA offers many benefits but may only be suitable for advanced traders.
How can you trade with direct market access?
You can trade with direct market access via IG’s web-based trading platform (share trading) and L2 Dealer platform. You can also trade with DMA via the IG mobile platforms for iOS and Android if you have set up your permissions by speaking to one of our consultants over the phone.