customers. The relationship between the trader (the customer) and the market maker (the bank; the trading platform; Easy-Forex™; etc.) is simply based on the fundamental market forces of supply and demand.
Can a market maker influence market prices against a client’s position?
Definitely not, because the Forex market is the nearest thing to a “perfect market” (as defined by economic theory) in which no single participant is powerful enough to push prices in a specific direction. This is the biggest market in the world today, with daily volumes reaching 3 trillion dollars. No market maker is in a position to effectively manipulate the market.
What is the main source of earnings for Forex market makers?
The major source of earnings for market makers is the spread between the bid and the ask prices. Easy-Forex™ Trading Platform, for instance, maintains neutrality regarding the direction of any or all deals made by its traders; it earns its income from the spread.
How do market makers manage their exposure?
The way most market makers hedge their exposure is to hedge in bulk. They aggregate all client positions and pass some, or all, of their net risk to their liquidity providers. Easy-Forex™, for example, hedges its exposure in this fashion, in accordance with its risk management policy and legal requirements.
For liquidity, Easy-Forex™ works in cooperation with world's leading banks providing liquidity to the Forex industry: UBS (Switzerland) and RBS (Royal Bank of Scotland).
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