A must-read: Devexperts releases e-book to help FX/CFD/Crypto brokers navigate execution & liquidity

Rick Steves

Devexperts has released an e-book to help FX/CFD/Crypto brokers understand the mechanics of FX execution, the technology behind it, and to reach Level 80 in liquidity management.

As the first free material available of its kind, the e-book, ‘The Ins and Outs of Forex Liquidity Aggregation’, provides insights for expanding brokers that consider working with multiple liquidity providers, and their staff, in order to boost their confidence in pricing and hedging strategies.

The readers will get a behind-the-scenes look at broker operations related to liquidity management and liquidity flows in the Forex market.

Authored by Evgeny Sorokin, SVP of Software Engineering at Devexperts, the e-book also goes into detail on the lifecycle of quotes, orders, and trades, and explores the difference between PB and POP setups.

Muhammad Rasoul, the OTC retail trading expert who led several firms including GFT Markets/Gain Capital, ACM Group, and TradeTech Group, offered extensive praise to the e-book.

“This is a great E-Book that covers not only the basics of liquidity aggregation but some real fundamental issues that start-up brokers need to comprehend when they are setting up their companies’ base trading infrastructure.

“Mistakes around such critical aspects in a trading company as liquidity, the management of it, and the collateralization needed are very dangerous in the short, medium, and long term. This book will help all those that read it come up the curve to a stronger position of knowledge very quickly.

“I would dare say that not a single executive or senior manager at any brokerage firm shouldn’t understand these concepts. This is a great work, very much needed, Bravo!”, Mr. Rasoul added.

The e-book starts off by covering the issues that having one single liquidity provider can bring, as they can stop streaming quotes at any time or stream off-market quotes, widen the spread, not accept trades, or lack enough liquidity.

With the need for multiple LPs established, brokerages require a liquidity aggregator to make it work. From there, the author explains all the ins and outs of market data aggregation, no quotes, wide spread, LP rejections, and shallow depth.

Mr. Sorokin then explores the multi-LP environment challenges and how to determine the correct number of LPs, as well as the benefits of using a prime broker or even multiple prime brokers, depending on the brokers’ needs.

“In order to fully understand these complex topics, it’s necessary to have a basic understanding of how the forex market operates and the technology behind trading terminals”, Mr. Sorokin concluded. “That said, we’ve taken care to break the components down into digestible bites and provided real-life examples from everyday job of a forex dealer.”

Understanding the importance of liquidity is vital as pricing or trading issues can result in a huge risk and potentially ruin a broker.

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