The liquidity of the crypto-currency for the Forex brokers

The liquidity of the crypto-currency for the Forex brokers

The liquidity of the crypto-currency for the Forex brokers

The crypto-currencies have experienced a very strong growth in 2017, with a ceiling of market record high of over $ 120 billion. In this article, we will explain the different aspects of the liquidity of the crypto-currencies.

How a LP (liquidity provider) can provide liquidity to crypto-currencies ?

Market making

The forex brokers can go to a liquidity provider of crypto-currency that acts as a market maker. The LP is merely acting as a market maker for CFD by creating a book of cross-currency rates between the Bitcoin and the USD or the Bitcoin and the EUR. It accumulates the risk and covers all the net positions directly with exchange platforms for crypto-currencies such as Kraken or Bitfinex. To do this, he needs a lot of capital and an algorithm for market-making.


The brokers may contact a provider of liquidity to crypto-currencies that has a model STP. In this case, a crypto LP (which is usually another broker) sends all trades to one or more exchange platforms.

It can as well compensate for the trades to customers in these exchanges and be able to offer the trading of crypto-currencies.

Direct connection to a heat exchanger of crypto-currencies

The brokers can connect directly to an exchange platform for crypto-currencies to send the trades of their clients.

Brokers can choose one of these options or a combination. But, it is important to note that each of these three options has advantages and disadvantages. For example, it is more secure and much easier to deal with one or more of the LP-STP, accumulate cash that go directly on a heat exchanger. The main advantage of a LP market maker is that it can provide to brokers a leverage higher.

Chart BTC / USD. Source: Google Finance

How to operate the product in crypto-currencies ?

The brokers can connect to a crypto LP via a FIX API. The integration is much simpler with the brokers LP with exchange platforms for crypto-currencies.

Some brokers LP are already included in the connectivity providers such as PrimeXM, or OneZero, the brokers that use these LP can provide cryptocurrencies directly on their metatrader.

Traders do not need to open additional accounts, or even to connect to other trading platforms. They can trade currency pairs, indices and crypto-currencies such as BTC / USD or the ETH / USD on the same platform.


The crypto-currencies like Bitcoin (BTC), the Etherium, Litecoin, the Dash, the Ripple and more are usually crossed with the USD, the EUR, the GBP and the JPY.


The effect of leverage offered depends on the business model of the LP :

If the LP connects to the exchange and all trades go to the exchange, the leverage effect is the same as that of the exchange, which is usually around 3:1.

If the LP is a market maker, the effect of leverage offered may be a little higher. Some LP offer a leverage up to 20:1, but most of the time the leverage is about 10:1 or even 5:1.

The effect of leverage is well below that of the forex, but crypto-currencies are extremely volatile, up to 20% in 1 day. So even with a leverage of 2:1 or 3:1 price fluctuations and fluctuations in the account can be massive.


The commissions charged by the LP are quite similar to those charged by the platforms to trade.

The commission is calculated based on the percentage of the dollar value of the transaction. For example, an LP may charge 25 basis points (or 0.25% per side). If the Bitcoin is trading at $ 2000, and a trader buys 10 contracts of BTC / USD, it pays $ 50 commissions.

2000 $ X (0.25%) = 5 $
$ 5 X 10 contracts = 50 $


The crypto-currencies by their nature are not regulated, as is the exchange platforms. Regulators traditional are not currently equipped to deal with this new offering of crypto-currencies.

For these reasons, most of the LP provide liquidity to crypto-currencies through its entities offshore that are not as heavily regulated.

To reassure customers, some brokers important entities regulated by regulatory agencies major as the FCA and ASIC.


To conclude, it is extremely difficult to imagine a future without the crypto-currency as trading instruments, a form of payment, a product of coverage and an investment vehicle.

Many brokers have added this product to their list of instruments, but unless a trader is very skilled, be careful. The current flowing suggest a flash crash repeat. Careful investors will await the explosion of the bubble, crypto-currencies before investing.

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