Metatrader 5 and Direct Market Access

Filed under: Learn Forex Trading |

Picture 2Some forex brokers are now beginning to offer direct market access (DMA) on the new Metatrader 5 platform. There are several benefits of this and I have recently been testing it out with UK broker Alpari. The thing that you immediately notice is that the spreads are lower – much lower. In fact, most of the spreads on the major pairs offer less than a 1 pip spread. What’s more, I spoke to Alpari on the telephone and they assured me that there were no other hidden costs. This is good news. They also told me that by using DMA, there will be no re-quotes and that you can enter the market at the click of the mouse. Now, I have not experienced re-quotes too often anyway (maybe just once every couple of months), but this is also good news.

 

DMA is a kind of forex execution that allows traders to have direct access to the physical market. What this does, in effect, is to cut out the middleman and to give you slightly better prices. The only downside to this as I see it is that the spreads are variable. However, since many STP (straight through processing) and ECN brokers already offer variable spreads; this is not a vastly new thing to get to grips with. Fixed spreads tend to be larger on average anyway, and I myself have been using a broker with variable spreads for a long time anyway.

 

You may be wondering how DMA brokers make a profit if the spreads are so low? Well, DMA brokers have fewer technology expenses and they get the best possible price quotes from banks and other providers. As the prices they get are so lower, they are able to make a profit by making just a small mark-up on the spreads. I have only just started using this DMA system, and I may write a follow-up article in the coming months – but early impressions are positive.

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