What is a DMA (Direct Market Access) Forex broker?

DMA is the acronym corresponding to Direct Market Access, since, as its name indicates, it allows traders to access real market prices directly and not through prices provided by a market maker. When an investor trades through a DMA system, his trades are executed with greater transparency and flexibility compared to other order execution models. The DMA model is considered a system designed for advanced traders.

When a trader uses the DMA system he can place his trades directly on the order books of the markets, usually the stock markets. This factor allows them to see the orders that are being traded and that information gives them a very important advantage when designing their strategy, although investors who benefit from direct market access are charged a commission.

Why do some investors prefer the DMA model?

Although using this system requires traders to pay a commission, direct access is highly valued because it allows the investor to have a complete view of the market itself. This helps detect price changes that may occur and based on these data the trader can draw the strategy that leads to profitability. It must be taken into account that an important part of the benefits obtained when trading in any market are produced by knowing how to take advantage of these price changes.

Other advantages of trading with the DMA model fall on the type of relationship that traders establish with their brokers or intermediaries. Brokers that operate with the DMA system accept all types of transactions and have a higher number of liquidity providers. In addition, brokers that offer DMA execution accept any technique or way of trading, and most importantly, these brokers have direct access to the market order book.

When it comes to trading involving Contracts for Difference (CFD), DMA refers to a type of trading that gives investors and traders direct access to the underlying market by transmitting orders directly to an exchange. This means there is no broker intervention and transparency is paramount. As a DMA broker offers the trader direct access to the markets, all transactions are covered.

DMA CFDs offer traders many of the advantages of conventional trading, but with the added benefit of leverage, i.e. trading on margin.

The main characteristics of brokers that operate with the DMA model are:

  • It only offers market execution.
  • It only offers variable spreads.
  • 5-digit quotes.
  • Optional function: DOM (access to the depth of the market book for its acronym in English).
  • The quotes that the DMA brokers offer to their clients are transmitted directly from the liquidity providers, who are committed to offering Bid/Ask quotes. This ensures that there are no requotes, partial fills, and price rejections.
  • DMA brokers charge commissions based on the trader’s trading volume.

What is level 2 data?

If you want only live pricing, you need real-time Tier 1 data. It usually shows the highest bid price, the lowest ask price, and the available trading volume.

Level 2 data is much more detailed. It shows the market depth: the best bid and ask prices, the volumes available, but also the other best bids and asks in the exchange’s electronic order book. Thus, on one side of the screen there will be a list of buying prices and on the other a list of selling prices.

The exact number of quotes displayed varies between exchanges. Some will only display the top five positions in the order book, while others – notably the Nasdaq – will allow you to view the entire order book.

The following screenshot shows an example of a level 2 screen. On the left, you can see the buy orders and the total volume at each bid price. On the right, you can see the sell orders and the total volume available at each ask price. The yellow band at the top indicates the best bid and ask prices, which is the current market price.

Example of Level 2 quotes. Source: http://www.broker-forex.eu/

Stock DMA CFDs

DMA CFD trading offers traders the advantage of being able to enter or exit trades at a more favorable price, giving them an advantage over traders using a Market Maker broker. When a DMA CFD trader places an order, it is instantly displayed on the exchange and therefore has an effect on the price of the stock on which the CFD is based. This is why CFD traders are called “price makers” as they have the ability to directly influence the market.

Unlike regular stock CFDs whose prices are essentially created by the broker itself (since they are unregulated OTC derivatives) and do not directly reflect actual prices on the underlying markets, DMA stock CFDs take their quotes directly from the underlying shares.

This means that the broker allows traders to view and trade live order books from the major global regulated stock exchanges.

Benefits of trading CFDs on DMA shares:

  • They offer greater visibility and flexibility.
  • Prices are taken directly from the underlying stock markets.
  • Access and participation in the market of the underlying shares.
  • Interaction with real-time orders from global stock exchanges.
  • Your orders will be reflected in the underlying market.

Trading DMA Stock CFDs allows the trader to place and view their mirrored orders directly on the underlying physical market of the stock they are trading.

However, as is the case with all CFD instruments, when trading DMA Share CFDs the client does not gain any ownership rights to the underlying shares traded through the CFDs.

List of Forex Brokers with DMA model

Below is a list of brokers that offer the DMA/STP market trading model to their clients:

BrokerRegulationTrading InstrumentsMinimum DepositBroker Review
HF Markets
-CFD on indices, shares, commodities, bonds, and crypto
-Physical stocks
-Physical ETF
Admiral Markets
-CFD on indices, shares, commodities, and crypto
-Physical stocks
-Physical ETF
-CFD on indices, shares, commodities, and crypto
-CFD on indices, shares, commodities, and crypto
-Physical stocks
-Physical ETF
-CFD on indices, shares, commodities, and crypto
-CFD on indices, shares, commodities, and crypto

DMA/STP brokers

Forex brokers that offer DMA execution provide direct and transparent access to the best bid/ask prices offered by liquidity providers. Unlike regular market maker brokers:

  • DMA brokers have a larger number of liquidity providers.
  • DMA brokers never offer fixed spreads, only variable spreads. This is because bid/ask quotes are constantly changing as they come from liquidity providers.
  • DMA-type trade execution is always a market execution.
  • There are no requotes.
  • The DMA trading model accepts all types of trading styles: scalping, swing trading, trading based on market news, position trading and other types of trading strategies.
  • DMA-type execution also offers Market or Order book depth (similar to ECN execution), so traders are able to see all bid/ask prices from different liquidity providers.

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