If you were to ask: What are the advantages of Direct Market Access? to one of the many traders who utilise this technology then they might well answer with enthusiastic talk of high technology, speed, flexibility and independence. Indeed they might well be so enthusiastic that they lose you in detail and leave you feeling more confused than you were at the start of the conversation. So we will try and offer a clear and concise answer to the question: ‘What are the advantages of Direct Market Access?’ so that you can come to your own decisions and decide whether it would be an asset to your trading strategies.
The first answer to the question What are the advantages of Direct Market Access? is that it offers direct access to the market. You will no longer have your trade pass through the mediums of brokers and their own in-house traders. The simple fact of actually being in control of your transactions might well be advantage enough for you. You will also be struck by the lower transaction costs. The reason for this is obvious if you pause to think a moment. With DMA you are paying simply for technology. In a conventional transaction you pay for the broker’s or dealer’s time and also his or her expertise and also his or her responsibilities to you. With DMA you take this responsibility upon your own head. Some of you would find this liberating and that would be an answer to the question What are the advantages of Direct Market Access?
A further advantage could be in the field of the security of your transactions. When you are trading with DMA technology you will enjoy a high degree of anonymity behind your DMA provider. There is very little chance that important information will leak out, and the great majority of DMA providers take pains to ensure the security of their systems. This could be seen as another answer to the question ‘What are the advantages of Direct Market Access?’
One final reply to the question What are the advantages of Direct Market Access? is that DMA systems do not simply open a path to the exchange’s order book. The providers ensure that flows of all the relevant information needed by the trader to transact his or her business are available, usually in real time. This information, coming as it does from an analysis of the condition of the market at the time and not filtered through the perception of a broker/trader, makes for a high degree of transparency in trade. Again this could well appeal to those who wish to take responsibility for their own decisions and directly manage their own trade. The fact that DMA makes this possible is the final answer to the question What are the advantages of Direct Market Access?
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