The first person a trader knowingly interacts with is a market maker. After making numerous first-time loss trades and looking online for a reason, they find an explanation for their failures. It turns out that the trader precisely analyzed and set the stop-loss level with such a margin of safety, but there is a massive and terrible monster on the market that drives the price up to that level. FXCM will go over the principles of market makers with you as it relates to best forex malaysia.
One of the market participants, the market maker, is hiding behind the guise of this biggest adversary. The market maker performs a different, more worldwide duty than conventional exchange speculators, who profit from the price difference while buying and selling different trading instruments. It offers market liquidity and serves as the second party to the trade. If a steady tendency exists, it must go against the grain of society. Financial resources, like all other resources, have a limit. Hence market makers use a variety of option strategies to implement sophisticated hedging systems in their transactions. All labor must be compensated, and each deal involves each market participant paying a market maker. The cost is a spread, not a stop-loss, and the spread between buy and sell is always in the market maker’s favor.
It is a financial intermediary established with the sole purpose of connecting buyers and sellers to earn a commission. The market maker converts the conglomerate’s euros into US dollars as soon as they receive the request for the transaction. Therefore, they will trade the EUR/USD pair, selling Euros and purchasing Dollars. Since the sale of Euros and the purchase of USD happen instantly, the market maker seeks out the best exchange rate possible for Euros to USD.