Direct market access or DMA is used when traders place trades directly in the electronic order books of exchanges. This process is facilitated digitally. DMA is not commonly used by the majority of brokers and traditionally, one would contact a broker by telephone or submit a request online.
The DMA method can only truly work if there are a large number of traders that want to buy or sell the particular [instrument] in question. This means that instead of the trader being a price taker, it allows them to evolve into a price maker.
Key takeaways:
- DMA permits traders to place orders directly in the electronic order books of exchanges.
- During trading, the window for earnings might be very small, however DMA aids in speeding the process between when the order was placed and the active trade.
- DMA empowers the traders to become price makers rather than price takers.