Direct market access CFD Broker vs. not

Hi there,
I am trading on CMCmarkets and what are actually the advantages of trading with a direct market accesse CFD broker, except the higher costs (which would be a disadvantage then).

Cheers or clarifying,

Cosmoglobe

cosmoglobe said:

Hi there,
I am trading on CMCmarkets and what are actually the advantages of trading with a direct market accesse CFD broker, except the higher costs (which would be a disadvantage then).

Cheers or clarifying,

Cosmoglobe

Click to expand...

DMA CFD brokers allow one to participate in auctions, receive more transparent pricing based upon the underlying security instead of what a broker quotes, and allow for larger order sizes to be placed.

for more info on Direct market access and suitable brokers visit;
www.dmatradingwithsam.co.uk

cosmoglobe said:

Hi there,
I am trading on CMCmarkets and what are actually the advantages of trading with a direct market accesse CFD broker, except the higher costs (which would be a disadvantage then).

Cheers or clarifying,

Cosmoglobe

Click to expand...

Trading DMA CFDs have many advantages over the market maker model. You are also able to see level 2 depth (orders in the underlying order book). For larger traders you can see the liquidity which can be very important. The broker and client interests become aligned and there are no re quotes or order rejections and only natural slippage. You can also be a price maker as well as a price taker meaning you can put in limit orders at certain prices instead of just going long or short at the specified price. Opening and closing auctions where large orders can be placed without moving the price as much. further benefits are shown at DMA or Market Maker | Direct Market Access | CFDs | FP Markets

You'll always find a DMA broker cheaper. Spread equities is a game of smoke and mirrors to move capital from one entity to another.

When trading equities on leverage you already have the market on the other side of you, it's nonsensical to then add another party into the mix which cannot possibly ever be on you side of the fence.

"But there are two rather more predatory strategies. One is called algo-sniffing. Here, a super-fast computer tries to find other computers going about their everyday business of buying or selling shares, and figures out what they're going to do and when.

The algo-sniffer can then get ahead of the game and exploit the slower computer. And of course you could have algo-sniffer-sniffers and algo-sniffer-sniffer-sniffers in a high-frequency arms race. No wonder speed can be so important.


Algorithms play a key part in financial life And finally, a particular sub-category of the algo-sniffer is the spoofer, which deliberately makes fake offers designed to lure other computers to show their hands, then cancels the offers."


BBC News - High-frequency trading and the $440m mistake

FP Markets said:

Trading DMA CFDs have many advantages over the market maker model. You are also able to see level 2 depth (orders in the underlying order book). For larger traders you can see the liquidity which can be very important. The broker and client interests become aligned and there are no re quotes or order rejections and only natural slippage. You can also be a price maker as well as a price taker meaning you can put in limit orders at certain prices instead of just going long or short at the specified price. Opening and closing auctions where large orders can be placed without moving the price as much. further benefits are shown at DMA or Market Maker | Direct Market Access | CFDs | FP Markets

Click to expand...

But aren't there a liquidity problem with DMA CFDs? At least that was the case a couple of years back when I checked them out.

cosmoglobe said:

Hi there,
I am trading on CMCmarkets and what are actually the advantages of trading with a direct market accesse CFD broker, except the higher costs (which would be a disadvantage then).

Cheers or clarifying,

Cosmoglobe

Click to expand...

If you have plenty of money and experience I would go with DMA trading (I am not specifically talking about CFDs). It also depends on you trading style, if you are an extreme scalper one should in general not trade with a market maker.