Direct Market Access in UK trading is an interesting subject and may be something that you will want to follow in the future. The theory behind the subject is an appealing one; it is that the trader, that is you, will take control of your trading directly, using modern communications technology to effectively by-pass the dealers or brokers and trade in financial instruments in real time. There are considerable benefits theoretically available to those who wish to indulge in Direct Market Access in UK markets. However, there are also some drawbacks which have been pointed out by the professional brokers and dealers.
One of the theoretical advantages to Direct Market Access in UK is that the customer takes on all the responsibilities traditionally shouldered by brokers and dealers in conventional trading. As he or she does not have to pay for the broker’s or dealer’s expertise or his responsibilities, the customer benefits by lower transaction costs. If you choose DMA then you pay for the technology and not the person. Another possible advantage comes as a by product of the technological developments that have made DMA possible in the first place. The independent trader can now receive the same sort of information that the broker or dealer acts on in real time, and use this information to make his or her own informed decisions. Direct Market Access in UK certainly seems to be designed to appeal to those who like to take control of their own destinies.
As is so often the case in the financial markets, each advantage has a corresponding disadvantage. Direct Market Access in UK may place traders in a position where they are very vulnerable. In fact it might drop them in right out of their depth. It is easy to imagine a novice becoming overwhelmed by information, something which is not going to happen to a reputable dealer or broker. A novice could fall victim to one of the frequent traps and pitfalls that abound in the financial markets. These traps and pitfalls a dealer or broker would have spotted and known how to avoid. Direct Market Access in UK trading may suit a few well-informed and well-organised traders, but it could prove a temptation to those who would be better off relying on the knowledge and acquired expertise of their broker or dealer.
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