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How to Choose a Forex Market Maker

When choosing a Forex market maker, you want to look for:

Reliability

  • Reliability is the most important characteristic of a market maker. This gives traders the confidence that they can trust their market maker to fulfill its obligations and protect their interests and capital. At EXNESS, clients can use a unique automatic withdrawal service to access the funds in their trading accounts.
  • One indicator of a company’s reliability is how long it has been in the market. An established broker values its long-term reputation and cultivates the trust of each client.
  • A reliable market maker will also be licensed by a well-known market regulator.
  • Another sign of a serious company is a well-designed, easy-to-navigate website and high-quality online services. Furthermore, a reliable company never hesitates to acknowledge its mistakes and make things right for its clients.
  • Finally, other traders’ opinions (Internet reviews) can provide important information about a company’s reliability. While you should think twice before signing up with a company that has lots of negative reviews in online forums, also remember that not all anonymous reviews are equal (some may be submitted by competitors’ employees).

Profitable Trading Conditions

  • Your trading should bring you maximum profit with minimal risks. The best way to reach that ideal is by cutting the cost of opening and maintaining positions. In other words, you are looking for low spreads and large leverage, which reduces the capital you need to hold your open positions.
  • Another factor affecting your profitability is the quality of your market maker’sorder fills. The less requoting and slippage, the better off you are. High quality fills also regulate risk by protecting your trading strategy.

Convenient Trading

  • A market maker’s services must meet exacting international standards. The best market makers use the latest technology and provide their employees with high quality continual training.
  • EXNESS makes every effort to improve the trading experience for our clients. Our traders have access to a whole arsenal of convenience tools for faster and easier trading, including: VPS hosting, automatic withdrawals, a wide array of payment systems, and a large number of available instruments. And when questions arise, our traders know they can always contact the skilled EXNESS support service, which is open 24/7.

EXNESS values its industry reputation as a responsible market maker. We build client relationships based on trust and mutual benefit. Traders who work with us get a reliable broker, the best possible conditions for implementing any trading strategy, and the best quality services.

Shady Brokers: what to watch out for

Dishonest market makers frequently work against their clients by manipulating trading conditions, regardless of actual market movement, in order to turn a profit. Most of the time these underhanded methods are also illegal and in violation of the contractual relationship between trader and company. However, it can be difficult to spot illegal manipulation on the part of a market maker. Below is a list of the most common shady practices and what you should watch for:

1. Quote manipulation
Market Maker’s actions Key detection methods Additional detection methods
1.1. Non-market quotes: the broker issues quotes at non-existent prices in order to trigger its clients’ stop orders (Buy Stop, Sell Stop, Stop Loss). When this happens, the client always loses. Traders’ positions can even get closed with a Stop Out. Compare the market maker’s bid and ask prices with the quotes of reputable market makers with years of presence in the industry. SSome variation in quotes (1-3 pips in a calm market) is normal. Review candle history for a long period of time. Non-market quotes usually stand out on the charts.
1.2. Spread manipulation: the broker increases the spread on an instrument right when a trader opens or closes a position. Observe the spread before and after you open or close a position. There are also software tools (indicators) available that can help you monitor spread changes.
1.3. Unfounded spread increases. Use specialized software (indicators) to monitor changes in spreads
2. Manipulation of traders’ fills
Market Maker’s actions Key detection methods Additional detection methods
2.1. Manipulating fills: the broker holds up orders and requotes if the price is moving in a trader’s favor but fills at the trader’s price if the price is moving against him/her. Pay attention to the fill time over a large number of orders. As a rule, if the broker has a delay programmed into its system, it will be at least 1 second in duration, meaning that all market orders will take at least a second or more to get filled.
2.2. Delaying pending orders (supposedly to confirm the price): this type of delay lets the broker artificially create slippage on stop orders or prevent limit orders (including Take Profit orders) from being filled if the price reaches the trigger level and “retreats.” Observation reveals this type of manipulation. The terminal changes the color of an order, so you can measure the amount of time between when the price reaches the trigger level and when the order is filled Similarly, you may notice instances when the price reaches the trigger level and retreats yet the order is not filled.
2.3. Unilateral requoting on client orders Review terminal logs and make a careful comparison of order prices and offered requotes over a large time interval. In most cases, requotes will work against the trader (the requote offers a price that is worse for the trader than the order price).
2.4. Unilateral slippage Review the terminal logs. In the majority of cases, you will see slippage on Stop orders (Buy stop, Sell stop, Stop loss), always to the trader’s disadvantage. Slippage on Limit orders (Buy limit, Sell limit, Take profit) to the trader’s benefit will be extremely rare.
2.5. Trading blocks: the broker halts trading on news or during volatility (and may even go so far as to turn off the servers) Watch what happens to trading when important news is released. Fills may take several minutes or server connections may go down. Study the documents governing your relationship with the market maker: this type of blockage may be spelled out as part of the company’s strategy.
2.6. Filling traders’ orders manually (manual dealing). A company employee fills all orders manually, acting in the interest of the company, not traders. Watch what happens to the trading process during market volatility, when manual delays can last more than ten minutes. Frequently orders are filled only after the price has become unprofitable for the trader. Study the documents governing your relationship with the market maker: the company may reserve the right to use manual fills.
3. Manipulating traders’ positions
Market Maker’s actions Key detection methods Additional detection methods
3.1. Removing positions supposedly due to non-market quotes (without obviously non-market prices) Keep a close eye on your positions and compare the bid/ask prices your market maker gives you with the quotes of other market makers. Study the documents governing your relationship you’re your market maker. The company may reserve the right to use such methods.
3.2 Removing positions supposedly because you held a position for an insufficient amount of time Keep a close eye on your open positions.
3.3 Opening and backdating unprofitable positions without traders’ knowledge Regularly review your open positions and capital (especially if you have a large number of positions open at one time). There is software available that can monitor disappearing or backdated positions.

Pay attention to the signs of shady dealing when you choose a broker. We hope this information will help beginning traders avoid pitfalls and make the right decision.

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EXNESS (CY) LTD (registration number HE 293057) is authorized and regulated by CySEC (Cyprus Securities and Exchange Commission), license number 178/12.
EXNESS LIMITED (registration number 3570551) is listed on New Zealand's Financial Service Provider Register (No. FSP181164) and is also a member of the Financial Dispute Resolution Service.
EXNESS LIMITED (VC), registration number 21927 (IBC 2014).
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General Risk Warning: CFDs are leveraged products and as such loses may be more than the initial invested capital. Trading in CFDs carry a high level of risk thus may not be appropriate for all investors. The investment value can both increase and decrease and the investors may lose all their invested capital. Under no circumstances shall the Company have any liability to any person or entity for any loss or damage in whole or part caused by, resulting from, or relating to any transactions related to CFDs.