What is a Market Maker broker?

A Market Maker broker is a type of broker that acts as an intermediary between the trader and the forex market. Unlike an ECN (Electronic Communication Network) broker that transmits orders to the interbank market, a MM broker "creates the market" and sets prices for the trade. This means that the Market Maker broker accepts the positions of its clients on its own account, becoming a party to the transaction. These types of brokers control the liquidity of the market and decide on spreads, i.e. the difference between the buy and sell price. The MM broker is therefore responsible for providing the investor with the right conditions for concluding transactions, but also for maintaining profits due to the difference between the offer and demand for a given instrument.

MM broker actions

The role of a Market Maker broker in Forex is that they "create" the market for their clients by offering them prices for trades that can be used directly by investors. The MM broker sets the buy and sell prices himself and decides whether the trades will be executed. When a trader opens a position, the broker becomes the opposite side of it, meaning that their profit comes from the trader making a loss, or vice versa. Therefore, MM brokers are often seen as opponents of their clients, which is a common feature of this type of activity.

MM brokers often offer more convenient conditions for investors, such as wider market opening hours, lower deposit requirements, as well as better availability of liquidity, especially for novice investors. However, it is worth remembering that in this model, brokers earn on spreads, commissions and costs related to the execution of orders.

Commissions and fees

Market Maker brokers primarily make money on the difference between the bid and ask price (spread), which is the basic fee for executing a trade. This spread can be fixed or variable, depending on the broker's policy. With MM brokers, the spread is usually wider than with ECN brokers, which means that the trader has to bear a larger transaction cost.

In addition, MM brokers may charge additional commissions to clients for executing trades, although in many cases these commissions are hidden in the wider spread. It is also worth noting that MM brokers can offer leverage, which allows the trader to open larger positions with less capital. This leverage is attractive to many investors, but at the same time it increases the risk of losses.

MM brokers may also charge fees for various additional services, such as withdrawals, currency change, or the use of advanced trading platforms. All of these costs can affect the overall profitability of your investment, so it's a good idea to review the full fee schedule before deciding on a broker.

Choosing the right Forex broker is crucial for success in the foreign exchange market. A Market Maker broker is one option that may be suitable for beginner investors, offering them easy access to the market and the opportunity to take advantage of attractive trading conditions. Understanding how a MM broker works, what commissions and fees are associated with its services, and which brokerage firms offer this model on the Polish market will help you make an informed choice. It is worth familiarizing yourself with the online training offered by Webinar Universe to carefully compare offers to find the best broker that meets the individual needs of the investor.