Direct Market Access (DMA) gives traders direct access to global stock exchanges, which speeds up your transactions and lowers your costs. By using DMA, you place your order online and it is immediately subject to direct market execution. This means that your broker makes it much easier to access market liquidity providers directly.
Please note where this is available as not all brokers offer DMA. This is because it requires execution outside the dealing center, most CFD brokers tend to prefer to be market-based and stick to the other side of the trade. DMA is a fairly new product for the retail investor. But this is something worth looking into, especially with a regulated broker like TRADE.com.
This multi-active broker offers access to literally hundreds of thousands of global securities on hundreds of different exchanges via DMA. Assets span a huge range of classes, which is great for portfolio diversification and tactical asset allocation. They, like other DMA brokers, will give you access to the DMA platform, in their case using the sophisticated IBKR platform.
DMA is a term that refers to electronic trading and is a facility that allows you to trade directly with the exchange's online order book.
Typically, you notify your broker online or by phone when your order has been transferred. The broker will then usually offer you the best price they can from their liquidity providers, taking into account the broker spread and other commissions. However, with DMA, you connect directly to the market, which means a faster process and also means cost savings as you effectively eliminate middlemen.
How it works?
DMA has been made possible in large part by the emergence of electronic commerce since the 1990s. The electronic order book can be accessed directly and the system (s) will automatically match the buyer with the seller in the best offer and the transaction will be completed. The transaction does not completely exclude the broker as it is the broker platform that connects you to the seller's side.
Usually DMA traders bring in large volumes, they are regular investors. If you are thinking about making a trade once a month, you may find that the DMA product is not suitable due to the existing volume requirements. In this case, it may be wiser to stick to an ECN broker and a straightforward execution style.
But you can always work out these finer details directly with your DMA broker. A decent broker like TRADE.com usually has a variety of products and can help you choose the ones that best suit your investor profile and goals.
