Behind the Closed Doors of FX Market Makers

Probably one of the best write-ups I’ve seen in a long time describing how retail FX market making works can be accessed here. The article was written by Javier Paz, President of Forex Datasource.

If you ever wondered how how retail FX market makers (like FXCM, GFT, Gain/Forex.com, etc.) make prices and fill trades, this article says it all. I’ve heard a lot of crap over the years from amateurs or those new to trading the FX market who have interesting stories about how market makers screwed their trades. Though it’s possible for a market maker (particularly of a Dealing Desk model – see article for explanation) to routinely “screw” their clients, it’s very unlikely to not possible with external execution (No-Dealing-Desk) models.

The sad truth behind who’s to blame behind so many, “I got screwed by XYZ market maker…” stories littering forums and websites on the Internet is not the market maker (in most cases). In fact, it’s the complainer who has themselves to blame…due to things like just plain sucking at trading or having an unrealistic to distorted view of how trading and market making works in the real-world.

I have no sympathy for those who blame others for their own lack of ability or mistakes. But I do sympathize with those who take responsibility for their actions, are serious about learning how the market works and the craft of trading.

Learn the rules of the game first and make sure you’re armed with the right skills before jumping into the ring with the big-dogs.

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