Market Makers vs Agency Model Brokers
A lot has been said about these types of brokerage business, but we are here to show you a wise, yet unpopular opinion.
Last years Market Makers have been blamed for all the evil in the forex market, as these brokers are actually expecting a trader to lose the money. Agency Model brokers, also known as A-Book brokers, have been praised as the companies serving the traders without any conflict of interest. Recent events of Black Thursday have enormously changed the situation, as those were mostly Agency Model Brokers that have lost a lot. As some brokers became insolvent, the trading community started to question whether Market Makers are actually a bad choice. Continue reading to see an unpopular point of view and argumentation.
Are Market Makers good?
Our experts love licensed and regulated Market Makers. Why is this so? Arranging a good quality service as a market maker is less cost consuming than arranging a decent ECN Forex broker. With Market Making Model, a broker has to assure a good transmission of pricing and orders between his own server and the client’s terminal. A-Book broker has to invest into whole infrastructure of transmitting your order directly to the market, which is usually done slower. In addition to this, Market Makers do not care about the spread much, as this is not the primary source of income. This is why you can trade cheaper with a Market Maker.
What you should note is that nobody likes to lose money. Especially Market Makers. This is where licenses and regulations come handy. A scam broker can simply cancel your position, refuse to pay you the outstanding balance and even avoid closing your positions. When trading with a reputable and licensed Market Maker – this is never a case. Another advantage of the Market Makers is that these brokerages provide great forex bonus offers.
Will market maker always bet against me?
Important to consider that even licensed market makers are not into losing money. This is why you will be placed on clearing if you are making some profit consequently. This will generally result in a slow execution and terrible pricing. Just imagine what kind of conditions can supply a broker that doesn’t have a developed infrastructure? This is why, once you see your trading conditions changed drastically – move to another broker.
The final thought
Don’t be afraid of the market makers. These are the brokers that expect you to lose, not make you lose. In return for their expectancy, they have much more to offer than a regular A-book broker. On top of that, with the current market situation, a market maker seems even as a more trusted option than an agency broker.
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