Tips to Choose the right Liquidity Provider for your Forex Brokerage

Choosing a right Liquidity Provider for your forex brokerage is highly essential. Liquidity though is one of the most common words used in the financial market.

Liquidity for sure is the biggest factor to understand about in the Forex industry as the transactions will be more productive and you will be one of the top brokers with deeper liquidity.

Let’s understand few important points to keep in mind when you are looking for a liquidity provider:

  1. Slippage:
In the forex market, slippage normally occurs when volatility is high, as per the news events or even during times. Regardless of the size of your company, a forex liquidity provider which can provide data on negative and positive slippage will add high value to your FX trading.

  1. Technology Provider:
Always go for the Liquidity Provider who offers various technical support such as MT4/MT5 bridge connections, FIX protocol and APIs, etc. Choosing the right provider for yourself will let you experience the best in the market.

  1. Price:
The pricing offered by a liquidity provider should always be looked at. Since the spreads provided by your liquidity provider in the low commission-based market should be competitive spreads. This is very critical as one of the most important things to take care of is price. A good price hack will make your business boom, so keep this point in your mind before going to any liquidity provider.

  1. Security:
Keeping your clients funds safe is a very big concern. It is therefore your duty, as a good forex broker, to guarantee that the funds are kept secure. Prior to actually entering into business, please make sure that accountability is upheld by the liquidity provider you are entering to be in business with and that he must also have a strong market history. It is the hard-earned money of your client, so it is solely your job to take care of the wealth of your client.

  1. Authenticity:
Having a liquidity provider that is both controlled and genuine is very essential. Cross-checking and having the license of the liquidity provider checked is very necessary.
Hello. My question is for anyone who knows about this. How can you know who your broker's LP is? I don’t think the information is publicly available nor is the broker under any legal obligation to disclose its business model to you.
Data and Price feeds – Stable and reliable feeds (both data and price feeds) are a must-have for a good forex liquidity provider. An ideal forex liquidity provider will have the latest most robust software that reflects real-time prices from the inter-bank foreign exchange markets.
Liquidity providers must have to offer an automated & robust system of reporting to the brokers for enabling them to meet the standard of regulatory requirements. Some important reports needs to be providers by LPs are:
  • Forex, cryptocurrency and options at one trading account
  • Automatic dealing of the deals
  • Terminals – Desktop, Web, Mobile
  • High performance
  • Security
  • Choice of Liquidity

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