Market structure and the role of market makers in forex | Pamm blog archive
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Market structure and the role of market makers in forex. An article from the Pamm blog archive on managed accounts and financial markets. Historical claims need to be checked against current terms and evidence.
Migration note: This historical article was translated from the previous blog. Claims about returns, risk, security, fees and referrals have not been verified as current. It is not financial advice or a deposit instruction. Review the recorded issues before publication.
Market structure and the role of market makers in forex
What role do market makers play in forex? An examination of market structure, liquidity, price manipulation and the behaviour of major participants.
Introduction
Forex is a decentralised market driven by large banks, financial institutions and market makers. Understanding its structure helps traders analyse price behaviour more effectively.
Who is a market maker?
A market maker is an institution that quotes both buying and selling prices so that the market always remains liquid.
Major global banks such as the following are among the leading participants in currency markets:
- JPMorgan Chase.
- Deutsche Bank.
Why do prices sometimes behave irrationally?
Because of:
- Stop hunting.
- Liquidity gathering.
- Execution of large orders.
Rapid moves before trend changes often result from major participants’ activity.
How can market structure be used to your advantage?
- Focus on liquidity areas.
- Analyse false breakouts.
- Examine trading volume.
Understanding market-maker behaviour can give traders deeper insight.
Conclusion
Forex is more than a chart: a network of major participants operates behind the scenes. Understanding market structure puts the trader one step ahead.
Compare the track record, drawdown and costs of PAMM, MAM and copy-trading accounts, with the source and time of every figure.
Review and compare accounts Calculate scenarios and costsSubmit a verifiable track record so investors can review it against transparent criteria.
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