Quality Liquidity Provider – Tips for Choosing

The Forex market trades the most liquid assets. These are currency pairs that each user can buy, sell or exchange at a favorable rate. The prospect of making good money (of course, considering the high risk) attracts a large number of traders. Moreover, many brokers are thinking about how to start a forex business.

This process is associated with various legal and physical nuances. Winning the competition from forex prime brokers is not easy. The company must offer clients the best conditions, a wide pool of trading instruments, and, most importantly, a reliable liquidity provider. Let’s find out more about its features and tasks.

The Main Purpose of the Liquidity Suppliers

Every broker who decides to start a cryptocurrency business on Forex should be guided by local legislation and offer clients the best opportunities. Traders do not like to waste time in vain, so it is necessary to execute orders instantly. This approach allows assets to be sold at market prices. This is a great option for customers who stay on your platform and recommend it to other users. Conversely, insufficient liquidity can lead to serious losses, because a trader is forced to buy a currency at a higher price and sell it at a lower price.

A broker’s order book has a sequence of orders to buy or sell an asset. This allows clients to test and use different strategies. A liquidity aggregator is an intermediary that connects traders with market makers. These are large funds and banks with a large pool of liquidity. This pool allows you to execute any order almost instantly.

Main Types of Liquidity Providers

Interestingly, a broker who decides to start a cryptocurrency exchange on Forex can also become a liquidity provider. This happens if the platform refuses to cooperate with intermediaries and works without third parties. But in this case, the order book depends on the orders of the clients registered on the platform. The depth of such a book may not be sufficient, since liquidity is provided at the expense of the firm’s clients.

The main disadvantage of this model is that orders for unpopular currency pairs can have a long execution time. For example, the EUR/USD pair has 20% of the total trading volume in the market. Another 14% is JPY/USD. Here, the list of offers to buy or sell is long, so no problems arise. But if we are talking about less popular variants (XAU/USD, EUR/CHF, XAG/USD), then the situation is different here. The broker’s order book may not contain the required number of units to sell. Therefore, traders must wait for a purchase, which increases the execution time of the trade. Moreover, the market price may change, leading to slippage and additional losses.

Therefore, users who are thinking about how to start a cryptocurrency business in Forex prefer brokers with zero spreads and a large pool of liquidity. Obviously, the best solution for a broker is to work with a quality LP with a good reputation.

How to Choose Quality and Reliable LP

Choosing a reliable liquidity provider is one of the most important steps in the process of creating a cryptocurrency exchange on Forex. It is necessary to pay attention to the following aspects.

•         LP must cooperate with Tier1 companies (world banks and investment funds such as Barclays, BNP Paribas, JP Morgan). In this case, the platform gains access to a huge pool of liquidity.

•         A reliable liquidity provider must work not only with Forex but also with crypto payments, metals, indices, stocks, and other assets.

•         It is important to have a quality and professional support service. The staff, working around the clock, will help to solve problems arising in the process of interaction.

B2Broker is an excellent choice for novice brokers who want to achieve a good result and start a cryptocurrency exchange with maximum efficiency. The firm offers a variety of useful services, including a white label cryptocurrency exchange software, and also acts as a liquidity provider. Access to a large pool of liquidity helps to increase the depth of the order book and ensure instant order execution. Most importantly, B2Broker provides 24/7 professional customer support. Thanks to such a partner, you will be able to create the best white label cryptocurrency exchange.


TBN Editor

Time Business News Editor Team