Electronic trading, being one of the most popular methods of capital increasing at present, is a complex infrastructure of interconnected systems working on the basis of mathematical algorithms and providing fast convergence of orders, which ultimately allows you to carry out the process of trading in different financial instruments. However, the connecting link in this infrastructure, which provides the connection between the platform and liquidity providers is a liquidity bridge, the most popular of which is MT4. This technology is provided by MT4 bridge providers.
What is a Liquidity Bridge?
The liquidity bridge is a central link, which connects liquidity provider (LP) and trading server of MT4/5 platforms. This software is provided by special bridge Forex providers.
- The tasks of the liquidity bridge are to receive quotes (prices) from the liquidity provider.
- Also, as a rule the liquidity bridge does some processing of received prices.
- It may be filtering and transformation and then sending quotes to the trading server.
- The liquidity bridge also receives trade requests from the trade server.
- The bridge executes the received trade request internally or sends it to the liquidity provider, waits for an answer on the trade request execution and transmits the result to the trade server.
It turns out that the liquidity bridge is a component that hides the details of the trading server and liquidity provider behavior from each other and combines them into one system. Hence the name “bridge”. In addition the liquidity bridge has many different settings, which can be managed through the user interface, which is also reflected in the ability to save reports on trade transactions.
In general this is a set of computational algorithms working on a particular model, the whole system does not look complicated. There are types of liquidity bridges, which are implemented as a plugin to a trade server. However, on the whole, such a solution does not scale well in the future, for example in the case of working with a lot of trading servers.
5 Things to Know About When Selecting an MT4 Bridge
In order to choose the right MT4 liquidity bridge, you need to take care of a few things. The following are the main ones.
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Pricing
You should ensure that you take your time when looking at pricing plans and contract drafts so that you don’t miss anything that might be hidden charges in the future. Take the time to learn more about the trading volume and setup fees. There may be a monthly fee that is required, so make sure you ask about it. Discover the cost involved with connecting a new liquidity provider or exchange. Make sure you pay attention to any product bundles, special promotions, and other offers that may be available.
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Aggregation Features
There are more or less similar functions available on MT4 bridges today. However, it is important not to assume that a product will accomplish all your requirements. Is it capable of aggregating the types of data that are necessary? How easy is it to use the GUI? Brainstorm with your colleagues and list all the features you will try out during the trial period that you think are a “must-have” and “good to have”.
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Supported Quantity of Liquidity Providers
Businesses should not be tied down to a tool that does not allow them to grow or develop their business models. Think about the possibility that one day you will want to offer your clients some exotic crypto pairs. Hence, you should ensure that your bridging solution does not only offer access to liquidity providers who currently offer favorable terms of collaboration, but also provides you with the flexibility to add new connections in the future.
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Technical Support
Bridges are an integral part of your trading infrastructure, so it is necessary that you remain in constant contact with your MT4 bridge provider. MT4 bridge providers may provide reviews on third-party websites or on their own websites to help you gain a better understanding of their capabilities. Furthermore, you may wish to Google the company and ask its current clients if it has a dedicated team of professionals providing support? During a limited time period, are those people able to provide clear answers to the questions that arise from their clients? In the event of an emergency, is there an emergency line available?
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Performance and Speed of the MT4 Bridge
A company on the market strives to provide its clients with the most rapid execution of trades and data feeds possible. What are the best methods for checking and measuring it? Try out the solution on your own by asking for a trial period and seeing how it works. The process of running several tests will only take a few days. The fastest method to define the precise speed of orders execution would be to use your stopwatch.
Top 5 Liquidity Bridge Providers
There is a wide range of liquidity bridge providers on the market, but let’s take a look at the most well-known of them.
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Devexperts
Devexperts develops software products designed to automate financial, brokerage and exchange activities. Among their projects one can find systems for online trading on stock and Forex markets, financial document management systems, products for technical analysis, services for providing market information in real time.
Devexperts is actively developing the company’s main product – trading platform for financial markets. The product is both a “box” delivered on-premises or within the SaaS model, and a “framework” for private solutions for brokerage companies.
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Centroid Solutions
Centroid Solutions is a fintech company that specializes in risk management, quantitative analytics, complex execution strategies, and connectivity solutions for multi-asset financial brokers. It offers Centroid Risk, a business intelligence software that offers a convenient GUI (graphical user interface) interface to monitor and analyze the company’s risk exposures and all trading activities; and Centroid Bridge, an engine that provides order routing and execution, liquidity management and reporting system for multi-asset platform.
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Advanced Markets
Advanced Markets is a wholesale provider of liquidity, credit and technology solutions for brokers and banks offering FX, metals, energy and CFD traders. In addition, the company offers a liquidity bridge. The firm’s solutions are now leading brokers and banks in the Americas, Europe, Asia, Australia and New Zealand.
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oneZero
oneZero develops corporate multi-asset trading technology for retail brokers, institutional brokers, banks and liquidity providers. The company provides access to liquidity bridge Forex technology. Their platform consists of three components – Hub, EcoSystem and Data Source – which together provide a complete solution for trading technology, distribution and analytics.
Conclusion
Trading financial assets has become an incredibly popular way to make money in today’s world, but despite its accessibility, it is a complex process of creating, placing, matching and executing orders between buyers and sellers of an asset. The liquidity bridge plays a paramount role in this process, providing the link between liquidity providers and trading platforms, which is essential for the creation of the necessary infrastructure for electronic trading in the financial markets.
