Best Market Maker Brokers
Market maker brokers are companies that buy and sell financial assets with the use of their own inventories. They allow markets to operate smoothly by supplying deep liquidity and provide important benefits for short-term traders.
This guide will explain how they work, plus the advantages and disadvantages you can experience by day trading with a market maker broker. We’ve also evaluated a long row of companies to bring you our pick of the best market maker brokers.
Best Market Maker Brokers 2024
These are the top market-making brokers based on our exhaustive reviews:
- AvaTrade - AvaTrade offers the full package for short-term traders. There is powerful charting software, reliable execution, transparent fees, and fast account opening with a low minimum deposit.
- OANDA US - OANDA remains an excellent broker for US day traders seeking a user-friendly platform with premium analysis tools and a straightforward joining process. OANDA is also heavily regulated with a very high trust score.
- XM - XM is one of the best forex and CFD brokers we have tested. The flexible account types will suit a variety of short-term trading styles while the $5 minimum deposit and smooth sign-up process make it easy to start trading.
- eToro - eToro's social trading platform leads the pack with a terrific user experience and active community chat that can help beginners find opportunities. There are also competitive fees on thousands of CFDs and real stocks, plus excellent rewards for experienced strategy providers.
- Trade Nation - Trade Nation is a good choice for newer traders looking for a wide range of financial markets on a user-friendly platform. There is no minimum deposit, free funding options and strong education.
Best Market Maker Brokers Comparison
| Broker | Market Maker | Minimum Deposit | Investment Offering | Trading Platforms | Financial Regulators | Visit |
|---|---|---|---|---|---|---|
|
✔ | - | CFDs, Forex, Stocks, Indices, Commodities, ETFs, Bonds, Crypto, Spread Betting | WebTrader, AvaTradeGO, AvaOptions, MT4, MT5, AlgoTrader, TradingCentral, DupliTrade | ASIC, CySEC, FSCA, ISA, CBol, FSA, FSRA, BVI, ADGM | Visit |
|
✔ | $0 | Forex, Crypto | OANDA Trade, MT4, TradingView, AutoChartist | NFA, CFTC | Visit |
|
✔ | $5 | Forex, Stock CFDs, Turbo Stocks, Indices, Commodities, Precious Metals, Energies, Shares, Crypto, Futures | MT4, MT5 | ASIC, CySEC, DFSA, FSC, FSCA | Visit |
|
✔ | $50 | CFDs, Forex, Stocks, ETFs, Cryptos, Futures, Commodities, Bonds | eToro Web, CopyTrader, TradingCentral | FCA, ASIC, CySEC, FSA, FSRA, MFSA | Visit |
|
✔ | $0 | Forex, CFDs, Indices, Shares, Commodities, Futures, Bonds, Cryptos (Bahamas Entity Only) | MT4 | FCA, ASIC, FSCA, SCB, FSA | Visit |
|
✔ | - | Forex, CFDs, Stocks, Indices, Commodities and Cryptos | Skilling Trader, MT4, cTrader, TradingView | CySEC | Visit |
|
✔ | $100 | CFDs, Forex, Stocks, Indices, Commodities, Futures | FxPro Platform, MT4, MT5, cTrader, AutoChartist, TradingCentral, DupliTrade | FCA, CySEC, FSCA, SCB, FSC | Visit |
|
✔ | $0 | CFDs, Forex, Stocks, Indices, Commodities, ETFs, Treasuries, Custom Indices, Spread Betting | Web, MT4 | FCA, ASIC, MAS, CIRO, BaFin, FMA, DFSA | Visit |
|
✔ | $100 | CFDs on Forex, Stocks, Indices, Commodities, ETFs, Futures, Options, Crypto | WebTrader, App | FCA, ASIC, CySEC, DFSA, MAS, FSA, FSCA, FMA, EFSA | Visit |
|
✔ | $0 | CFDs, Forex, Stocks, Indices, Commodities, ETFs, Futures, Options, Crypto, Spread Betting | Web, ProRealTime, L2 Dealer, MT4, AutoChartist, TradingCentral | FCA, ASIC, NFA, CFTC, DFSA, BaFin, MAS, FSCA | Visit |
|
✔ | $0.01 | Crypto | BitMEX Web Platform, AlgoTrader, TradingView | Republic of Seychelles | Visit |
|
✔ | $100 | CFDs, Forex, Stocks, Commodities, Indices, Crypto, ETFs, Bonds, Spread Betting (UK Only) | Markets.com Web/App Platform, MT4, MT5 | FCA, CySEC, ASIC, FSCA, FSC | Visit |
|
✔ | $250 | Forex, ETFs, CFDs, Indices, Shares, Commodities, Cryptocurrencies | MT4, TradingCentral | CySEC | Visit |
|
✔ | $200 | Forex, CFDs, Indices, Stocks, Commodities | WebTrader, FXDD Mobile App, MT4, MT5 | MFSA, FSC, LFSA, SBS | Visit |
|
|
✔ | $100 | Futures on Forex, Commodities, Cryptos, Indices, Interest Rates | WebTrader, App | CFTC, NFA | Visit |
#1 - AvaTrade
Why We Chose AvaTrade
AvaTrade is a leading forex and CFD broker, established in 2006 and regulated across 9 jurisdictions. Over 400,000 users have signed up with the broker which processes over 2 million trades each month. The firm offers multiple trading platforms, including MT4, MT5, and a proprietary WebTrader. 1250+ financial instruments are available for day trading, alongside a comprehensive education center and multilingual customer support.
- Instruments: CFDs, Forex, Stocks, Indices, Commodities, ETFs, Bonds, Crypto, Spread Betting
- Regulator: ASIC, CySEC, FSCA, ISA, CBol, FSA, FSRA, BVI, ADGM
- Platforms: WebTrader, AvaTradeGO, AvaOptions, MT4, MT5, AlgoTrader, TradingCentral, DupliTrade
- Minimum Trade: 0.01 Lots
- Leverage: 1:30 (Retail) 1:400 (Pro)
Pros
- There's a great range of fee-free deposit methods, including bank wire, credit cards and popular e-wallets like Skrill
- WebTrader is well-suited to beginners and features a strong suite of technical analysis tools and market research for day traders
- AvaTrade is a heavily regulated and trustworthy broker with licenses from the ASIC, CySEC and more
Cons
- There is no ECN account with raw spreads
- Traders from the US are not accepted
- It’s a shame that there are no rebate schemes for serious traders looking for additional perks - CMC Markets would be a better choice here
#2 - OANDA US
Why We Chose OANDA US
OANDA is a popular brand offering exceptional execution, low deposit requirements and advanced charting and trading platform features. The top-rated brand has over 25 years of experience and is regulated by trusted agencies, including the NFA/CFTC. Around the clock support is available for short-term traders, alongside flexible contract sizes and automated trade executions.
- Instruments: Forex, Crypto
- Regulator: NFA, CFTC
- Platforms: OANDA Trade, MT4, TradingView, AutoChartist
- Minimum Deposit: $0
- Minimum Trade: 0.01 Lots
- Leverage: 1:50
Pros
- The proprietary OANDA web platform continues to deliver a highly competitive charting environment, including 65+ technical indicators powered by TradingView
- Beginners can get started easily with $0 minimum initial deposit
- Day traders can enjoy fast and reliable order execution
Cons
- It's a shame that customer support is not available on weekends
- The range of day trading markets is limited to forex and cryptos only
- There's only a small range of payment methods available, with no e-wallets supported
#3 - XM
Why We Chose XM
XM is a globally recognized forex and CFD broker with 10+ million clients in 190+ countries. Since 2009, this trusted broker has been known for its low fees on 1000+ instruments. XM is regulated by multiple financial bodies, including the ASIC and CySEC.
- Instruments: Forex, Stock CFDs, Turbo Stocks, Indices, Commodities, Precious Metals, Energies, Shares, Crypto, Futures
- Regulator: ASIC, CySEC, DFSA, FSC, FSCA
- Platforms: MT4, MT5
- Minimum Deposit: $5
- Minimum Trade: 0.01 Lots
Pros
- The broker offers premium research including market sentiment, fundamental insights and strategy builders
- Powerful MT4 and MT5 platforms are available with 60+ and 80+ technical charting tools
- Accessible trading accounts with a $5 minimum deposit and fast account opening
Cons
- There's $5 inactivity fee after only 3 months, though this won't affect active traders
- PayPal deposits are not supported
- There is weak regulatory oversight through the global entity
#4 - eToro
Why We Chose eToro
eToro is a top-rated multi-asset platform which offers trading services in thousands of CFDs, stocks and cryptoassets. Launched in 2007, the brand has millions of active traders globally and is authorized by tier one regulators, including the FCA and CySEC. The brand is particularly popular for its comprehensive social trading platform. Cryptoasset investing is highly volatile and unregulated in the UK and some EU countries. No consumer protection. Tax on profits may apply. 76% of retail accounts lose money.
- Instruments: CFDs, Forex, Stocks, ETFs, Cryptos, Futures, Commodities, Bonds
- Regulator: FCA, ASIC, CySEC, FSA, FSRA, MFSA
- Platforms: eToro Web, CopyTrader, TradingCentral
- Minimum Deposit: $50
- Minimum Trade: $10
Pros
- The broker's services are great for beginners, with commission-free stock trading, a low minimum deposit and an unlimited demo
- There's a comprehensive online training academy with accessible resources, from bitesize articles to comprehensive courses
- The web platform and mobile app perform better in user reviews and app rankings than top competitors, including AvaTrade
Cons
- Traders will face currency conversion fees for account denominations other than USD
- There is a $30 minimum withdrawal amount and a $5 fee, which will affect novices with low capital
- There are limited contact methods aside from the in-platform live chat
#5 - Trade Nation
Why We Chose Trade Nation
Trade Nation is a top FX and CFD broker regulated in multiple jurisdictions including the UK and Australia. The firm offers low-cost fixed and variable spreads on 1000+ assets with robust trading platforms and training materials. The Signal Centre can also be used for trade ideas.
- Instruments: Forex, CFDs, Indices, Shares, Commodities, Futures, Bonds, Cryptos (Bahamas Entity Only)
- Regulator: FCA, ASIC, FSCA, SCB, FSA
- Platforms: MT4
- Minimum Deposit: $0
- Minimum Trade: 0.1 Lots
- Leverage: 1:500 (entity dependent)
Pros
- Trade Nation is a multi-regulated and respected broker that previously operated as Core Spreads
- A choice of trading platforms and apps, including MT4, make the brand a good fit for savvy traders
- There is a low minimum deposit for beginners
Cons
- Fewer legal protections with offshore entity
How Did We Choose The Best Market Maker Brokers?
The first and most important thing we checked is that the company is trusted.
The best indicator of a trustworthy broker is authorization from a creditable body, such as the Securities and Exchange Commission in the US or the Financial Conduct Authority in the UK.
This will help safeguard your capital, ensure you are receiving a high level of customer care, and reduce the risk of falling victim to conflicts of interest.
Following that:
- We evaluated the market maker broker’s costs in the form of bid/ask spreads, commissions and additional fees.
- We looked for companies that are transparent about their operations and pricing structure.
- We looked for brokers with a wide selection of assets and securities, ensuring you’ll have a range of opportunities and the ability to build a diverse portfolio.
- We tested the broker’s trading platform to make sure it’s enjoyable to use and that you can enter and exit positions quickly and easily.
- We selected brokers with helpful features for short-term traders, including technical analysis tools, trading guides and mobile apps that facilitate trading ‘on the go’
- We prioritized market maker brokers with excellent customer support based on our hands-on tests that consider the speed and quality of assistance.
- We investigated the amount of borrowed funds, known as leverage, that you can use to trade, as this can play an important role in day trading strategies.
Understanding Market Makers
Market makers play an essential part in trading that takes place on regulated financial exchanges. They act as the middleman between buyers and sellers of financial securities, and continuously quote prices during market hours, thus ensuring that a trade can always be executed.
The deep liquidity that these institutions provide is critical for financial markets. It allows assets to be purchased and offloaded without causing substantial price turbulence.
Furthermore, their presence ensures that short-term traders, such as day traders, can open and close positions more easily.
Market makers also act as the middlemen in over-the-counter trading, where buyers and sellers do business outside of a financial exchange.
Importantly, market makers are not the same as brokerages. While brokers bring buyers and sellers together and pass orders onto third-party liquidity providers, market makers create the marketplace for investors by buying and selling assets directly to and from them.
However, financial institutions can act as both market makers and brokers. Trading with one of these dual-role entities carries advantages for short-term traders, though you should be aware of potential conflicts of interest that may arise.
Notably, market maker brokers may have an inherent conflict of interest as they often take positions opposite to their clients, potentially profiting from client losses. They also control prices and execution, which can lead to practices like price manipulation and less favorable execution for traders.
Strict regulation means that these companies must establish robust procedures and systems to avert any such conflicts.
These include setting up Chinese walls (barriers between different divisions), establishing strict order routing rules, and conducting regular internal audits.
How Do Market Makers Work?
These institutions anticipate executing high volumes of buy and sell orders each day. And so they hold large inventories of assets, such as stocks, commodities, currencies and bonds, that they stand ready to trade from.
This function means that markets can keep moving by guaranteeing that a buyer and a seller can always find someone to do business with.
When markets are ‘illiquid,’ an investor may have difficulties locating another to make a trade. In these situations, the spread – in other words, the difference between the buy (or bid) and sell (or ask) prices – can be exceptionally high, resulting in greater costs to the trader.
How Do Market Maker Brokers Make Money?
Market-making brokers primarily generate profits through the bid/ask spread. They seek to buy at a lower bid price and sell at the higher ask price, and bank the difference in the process.
These institutions are still able to make money when liquidity is healthy and bid-ask spreads are kept to a minimum.
Whilst margins are small, the colossal volume of trades that are placed each day enables them to make a tidy profit.
Certain market makers will also charge fees or commissions to execute trades. However, a high level of competition means that these costs – along with the difference between bid and ask prices – do not become prohibitive for traders.
Even if a market maker charges a trading fee, this can often be lower than that imposed by other brokers (like agency brokers).
Example Trade
Let’s say that I wish to trade shares in Colin’s Computers using a market maker broker. I believe prices of the company will rise in price, and decide to buy 100 shares in the business to capitalize on this. The company currently trades at $50 per share.
To begin with, I’ll have a look at the bid and ask prices on my market-making broker’s trading platform. They are listed as:
- Bid price: $49.90
- Ask price: $50.10
This results in a bid/ask spread of $0.20.
When I place my buy order for 100 Colin’s Computers shares, the brokerage will match my instruction with existing sell orders on the market. If there is a seller who’s happy to offload their shares at $50.10, my order will be executed at this price.
In this case, how much profit would the market maker receive?
First off, let’s have a look at the total cost of the trade to me. This stands at $5,010 ($50.10 x 100 shares).
Now let’s assume that the market maker initially bought those shares for their inventory at the lower price of $49.90 each. Their profit would come in at $20 (the bid/ask spread of $0.20 x 100 shares).
Bottom Line
Deep liquidity is the key to straightforward and cost-effective trading. And by using market-making brokers, traders can enjoy an optimal dealing experience and improve their chances of making a profit.
However, using one of these brokerages to trade also presents risks that individuals need to be constantly mindful of. That’s why we recommend choosing one of our top-rated market maker brokers.
FAQ
What Is A Market Maker?
A market maker is a firm or broker that provides bids and offers of a two-sided market along with the market size of each. By trading on both sides of the market, these companies provide a platform for trading, making their money through spreads.
Do Market Maker Brokers Manipulate Prices?
Market maker brokers set their own bid/ask prices, which makes it possible for them to manipulate asset prices. However, competition is so stiff that spreads offered by market makers are generally tight.
Finding a market maker broker that is registered with a respected authority will help prevent you from being scammed or manipulated.
Do Market Maker Brokers Own Stock?
A market maker will buy stock from you and hold it until it finds another buyer. During this time, the broker does own that stock. However, they do not hold shares for their own benefit.
What Are The Advantages Of Trading With A Market Maker Broker?
Market maker brokers with healthy liquidity allow traders to enter and exit positions rapidly, thus enabling you to swiftly capitalize on trading opportunities that arise. This also helps reduce the threat of slippage, where the expected and actual prices of a trade differ due to timing issues.
Many of these brokers also offer fixed spreads, which appeal to beginners especially, providing a clear picture of how much a trade will cost.
What Are The Risks Of Trading With A Market Maker Broker?
While their operations are often closely observed by regulators, the potential for market-making brokers to act in their own interests at the expense of traders is always present.
Also, market makers may not provide the same level of price transparency as other brokers, such as electronic communication network (ECN) brokers.
Additionally, with ECN brokers, it is possible to trade prices at certain times with little or no spread. This means day traders can often get better prices with these companies than with market makers.