The Rise of Foreign Exchange Aggregators in the Trading Industry
Have you ever encountered the term FX aggregator? Depending on how long you have been in the trading business you may or may not have heard the term.
An FX aggregator, also known as the Foreign Exchange aggregator is a software in Forex trading that is used in the execution of FX transactions in order to combine (aggregate) all the liquidity from different liquidity providers – hence the name.
The primary purpose of a Forex aggregator is to benefit from more favorable pricing and better order execution as well as to provide them to clients.
Forex aggregators are sophisticated software solutions that are mainly used by professional trading firms, brokerages, and other financial institutions as well as professional individual traders.
Basically, aggregators are being utilized based on several main functions in Forex trading.
They are usually used by institutional Forex traders to compare all prices that come from different liquidity locations as a way to get a realistic view of the current structure of the market. This can be from ECNs, global banks, market makers or sources like Hotspot FX, FXall, Currenex etc.
These aggregators also allow professional traders to interact and trade with other traders with the use of only 1 platform or API.
Some of the solutions work on providing support for order sweeping, while other solutions connect the entire order to a single provider of liquidity. A liquidity provider can be chosen using an order routing algorithm that is featured in an aggregator.
As a whole, the FX aggregator is the provider of software solutions that are used for liquidity aggregation while supporting combinations of order types, tiered pricing, and currencies.
As a matter of fact, a lot of Forex traders nowadays are getting hooked up on FX aggregators.
This is due to the fact that an FX aggregator enables them to get faster and better results in terms of trading costs – related to both prices and efficiency in executing transactions.
Foreign Exchange aggregators provide lightning speed order execution and more efficient routing of order based on specific rules. This advanced software uses the latest low-latency technology to execute orders in the fastest possible way.
There are already many firms that are providing this service to FX traders. Finance Magnates even adds that FX aggregators are already used by many firms for more than 10 years now. What makes traders attracted to FX aggregators even more?
Aside from the benefits in terms of profits, having a better perspective of the market’s depth and having access to the deepest possible liquidity is a big advantage to professional traders that execute millions in transactions every day.
Users of Forex aggregators can also take advantage of price arbitrage - the opportunities to instantly buy and then sell a security or currency at a higher price, thus making a nice quick profit in the process.
Finally, some of the more popular companies that offer FX aggregators include Soft-FX Aggregator, Quotix, NEX (EBS), Thomson Reuters Aggregator, and Integral.
Of course having the change to use any of them is a big advantage for any Forex trader. At the end, though the key to successful trading is not just an efficient partner company, or a super advanced trading tool, but also the dedication and passion to trading.