How does Direct Market Access (DMA) work in trading?

@weilo_daniel - 4 months ago - Trading Platforms

Hey everyone, hope you're good. I recently opened an account with IG, and they offer Direct Market Access (DMA) but i am not familiar with it. Please could you explain what DMA is and of what real benefit it can be to a small retail trader like me?

@cahaya_dewan - 4 months ago

Direct Market Access (DMA) is the technology that enables you to bypass your forex broker & trade directly with the source of liquidity which could be a bank, oil company, etc.

With DMA, you get more control over your trade & more transparency (since there is no middleman/broker).

With DMA you also get a better deal meaning tighter spreads and faster trade execution since your orders are filled as they come and not bulked up with other orders like some brokers do.

However, note that some brokers reserve DMA trading for professional clients only so retail traders may be excluded.

You say you opened an account with IG? their DMA is for professional traders only.

@obinna - 4 months ago

DMA gives you a direct connection to get pricing from the market without passing through your brokers dealing desk. It is most helpful in stock trading because you can also trade during after-market hours.

DMA can be expensive if you are trading small volumes because you still pay a flat commission per trade, stock exchange fees, plus other hidden fees. This is the reason why some brokers reserve DMA for high-volume traders alone.

DMA is a good trading superpower but only if it is in the right hands, if not it can do more harm than good if you are a novice.