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In recent years, there has been an explosion in interest for Forex trading. The highly liquid nature of the market and ease of access has attracted countless amateur and professional investors. To accommodate this growth, dozens of online brokerages have emerged, but not all of these are the same. There is a distinct difference between brokers that act as a market maker and those that are agency brokers or offer ECN, STP and DMA. The first of these is an ECN Forex Broker. Typically, these brokerages obtain price points from a variety of counter parties. In particular, market makers, banks and other trades connected to the network are the sources of price information for these platforms. Once all the data has been received and processed by the software, the interface will display the best available price. Usually, these companies will make money by charging a percentage based fee on each transaction conducted over the network. This type of brokerage will usually provide a buyer with the best available price. An STP Forex Broker operates in a more complex manner. Depending on the firm, this type of broker may apply an algorithm to determine how the trade should be executed. At times, the firm may route the order through to the general market. In other instances, the firm will send the order straight through to the market. This has led to some criticism of these firms. Many claim that this creates an unfair disadvantage for the investor. Without thoroughly knowing the factors considered by the algorithm, it may be impossible for the investor to create a profitable investment strategy. A DMA Forex Broker is the least accessible brokerage type for the individual investor. Typically, these trading facilities are only used by market making firms and broker dealers. Under this trading system, all participating traders have direct access to the market. This provides the traders with several important advantages. Firstly, the transaction costs are dramatically lower. Participant only pay for the technology needed to access the system. Secondly, since the information in the system is coming directly from other liquidity providers, there are no re-quotes, partial fills or rejected rates. A Forex Broker is able to provide these tools for all categories of investors. From amateur traders to large financial institutions, there is a broker that can provide access to these explosive markets. In fact, there are three major types of brokers, and they all carry unique attributes and cater to a particular set of clients. Before entering this exciting investment arena, it is important to determine your needs and goals. This will help you select a broker that can help you meet your financial goals. To learn more please visit www.clmforex.com Disclaimer: Trading of foreign exchange contracts, contracts for difference, derivatives and other investment products which are leveraged, can carry a high level of risk. These products may not be suitable for all investors. It is possible to lose more than your initial investment. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. A Product Disclosure Statement (PDS) is available from the company website. Please read and consider the PDS before making any decision to trade Core Liquidity Markets' products. The risks must be understood prior to trading. Core Liquidity Markets refers to Core Liquidity Markets Pty Ltd. Core Liquidity Markets is an Australian company which is registered with ASIC, ACN 164 994 049. Core Liquidity Markets is an authorized representative of Direct FX Trading Pty Ltd (AFSL) Number 305539, which is the authorizing Licensee and Principal.
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