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Is FXCM a market maker?
Yes, FXCM is a market maker, it operates its own dealing desk. When you make a trade as FXCM’s client, you are trading with FXCM and your order is not routed to the market.
| 💰 Forex commission per lot | No commission is charged |
| 💰 Forex commission class | - |
| 💰 Withdrawal fee | $0 |
| 💰 Inactivity fee | Yes |
| 💸 Minimum deposit | $50 |
| 🗺️ Deposit methods | Bank transfer, Credit/debit cards, Neteller, Skrill, Unionpay |
| 🎮 Demo account provided | Yes |
| 📋 Read more | Check out the FXCM review for 2023 |
Data updated on October 10, 2023
I've thoroughly tested FXCM services with our analyst team by opening a real-money account and these are my most important findings:
- FXCM is a market maker, it quotes its own bid/ask prices.
- FXCM operates its own dealing desk.
- As a client of FXCM, you will trade directly with FXCM, your orders won’t be routed to the market.
- Market maker brokers typically quote wider spreads but do not charge commissions.
If you want to see how a market maker such as FXCM compares to the best non-dealing desk brokers in terms of prices and services, search no further. Our analyst team compiled a top list of the best non-dealing desk brokers worldwide offering ECN routing by analyzing more than 500 data points for each broker and testing their services with a live account.
What is a market maker broker?
A market maker broker, also referred to as a dealing desk broker, plays a vital role in facilitating trading in financial markets, such as stock exchanges, foreign exchange (forex) markets, and cryptocurrency exchanges.
The primary function of a market maker broker is to provide liquidity to the market by creating a market for a particular financial instrument, thereby ensuring that there are always buyers and sellers available.
A market maker broker quotes its own bid price and ask price. The bid price is the price at which the broker is willing to buy the instrument, and the ask price is the price at which they are willing to sell it. The difference between the two prices, known as the spread, represents the market maker's profit margin for facilitating the trade.
The spread is essentially the cost traders pay to their broker for the convenience of executing trades.
Market makers provide continuous quotes for various financial instruments throughout trading hours. This means that they are always ready to buy or sell, regardless of whether there are active buyers or sellers from other traders.
When a trader wants to buy or sell a financial instrument, they can execute the trade directly with the market maker broker if they have a trading account at the broker. If the trader accepts the market maker's ask price, the trade is executed at that price. If the trader wants to sell, they can do so at the bid price offered by the market maker.
What is the difference between a market maker and a non-dealing desk broker?
The primary difference between a market maker and a non-dealing desk broker lies in their roles and functions within financial markets. Here are some crucial aspects of their activities.
| Dealing desk | Non-dealing desk |
|---|---|
| Stands ready to buy and sell specific financial instruments at all times, creating a market for those instruments | Has no specific obligation to provide liquidity like market makers |
| Operates its own dealing desk | Does not operate its own dealing desk |
| Its clients trade with their own broker | Routes buy and sell orders directly to the network of liquidity providers/interbank market |
| Applies its own fixed spreads | Applies market spreads |
| Does not charge commission | May charge commission |
| Costs typically less transparent | Cost more transparent |
| Potential conflict of interest with own clients as the market maker might take the other side of client positions | No potential conflict of interest as non-market makers do not trade against their clients |
Data updated on October 10, 2023
Some non-dealing desk brokers offer Direct Market Access (DMA) trading, which is the practice of placing trades directly in the underlying market.
A DMA broker provides traders with direct access to the order books of various financial markets, allowing them to interact with those markets in real time. DMA enables traders to place orders directly into the market without the need for intermediaries.
DMA brokers are commonly used by institutional traders and advanced retail traders who seek to execute orders with maximum transparency and control. Traders with DMA access can view market depth, place orders directly in the order book, and potentially interact with other participants in the market.
FAQs
Does FXCM offer 'best execution' for my orders?
Most top-tier regulators, including the SEC in the US, ASIC in Australia and the FCA in the UK, require brokers to execute orders on terms most favourable to the client. In deciding how to execute orders, the entities of FXCM overseen by a regulator that requires best execution, have a duty to seek the best execution that is reasonably available for customers' orders. That means the broker must evaluate the orders it receives from all customers in the aggregate and periodically assess which competing markets, market makers, or ECNs offer the most favorable terms of execution.
Can I direct my trades at FXCM?
FXCM is a market maker operating its own dealing desk. As a client of FXCM, you will be trading directly with your broker by default. Some brokers operate a hybrid system in the sense that they allow clients to open accounts where the orders will be routed to the market.
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