🏦 Brokers·intermediate

Market Maker Broker

Also called: dealing desk, dealer

A broker that takes the other side of your trades — they profit when you lose, creating an inherent conflict of interest.

A market maker broker creates their own market by taking the opposite side of every client trade. If you buy EUR/USD, the broker sells to you. If you sell, they buy from you. They manage their net exposure internally (hedging big winners with liquidity providers, eating small losers). Because they profit from losing trades, there's an inherent conflict of interest. Market makers aren't automatically scams. Many are regulated, honest operations that provide useful services: micro-lot trading, tight fixed spreads, small account minimums, fast execution on small orders. The issue is philosophical — your broker wants you to lose, which means their incentive structure is misaligned with yours. Market makers dominate retail forex because they're easier to set up, profitable, and accessible. ECN and STP brokers are better for serious traders, but market makers aren't going away any time soon. Pick one that's regulated in a strict jurisdiction (FCA, ASIC, CySEC) and you're probably fine.

Real trade example

During the 2015 CHF unpeg, many market maker brokers went insolvent because their clients' losses were bigger than their hedges. The conflict of interest cut both ways — client losses became broker liabilities when the broker couldn't absorb them fast enough.

Related terms

ECN Broker

intermediate

A broker that routes orders directly to a network of liquidity providers without taking the other side — no conflict of interest.

STP Broker

intermediate

A broker that routes orders straight through to liquidity providers without dealer intervention — similar to ECN but less transparent.

Broker

beginner

The company that gives you access to the forex market — the middleman between you and the currency you want to trade.

B-Book

advanced

A broker model where client trades are kept in-house (not routed to the market) — the broker takes the other side and profits from losses.

A-Book

advanced

A broker model where client trades are routed directly to external liquidity providers — the broker just passes through orders for commission.

Copy Trading

beginner

A service that lets you automatically copy the trades of another trader — popularized by platforms like eToro.

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