There are two main types of profit models for forex trading platforms: platforms with traders and platforms without traders.
There are trader platforms, also known as market maker platforms, that provide clients with a market to trade in and make a profit by holding trades in the opposite direction to the client when needed. The bid and ask prices that traders see may be different from the actual price because market makers can control the price, for example by widening the spreads to minimize risk. Some market makers will set the spreads to be fixed to better manage risk. Market maker platforms are profitable by earning a profit on spreads and profiting when traders lose money. The market maker will categorize traders, placing traders who have been losing money for a long period of time in a different category than those who have had the opportunity to make a profit for a long period of time. In the case of the losing category, the market maker will match their losses and turn them into profits for themselves. For the profitable category, the orders are hedged into the Forex market for a profit.
Traderless platforms utilize a method of connecting traders with banks, interbank markets and liquidity providers, allowing traders to trade directly at the forex market level. Such platforms do not act as a counterparty to the trader, nor do they ask for re-quotes or pause order confirmations, allowing investors to trade in real time without any restrictions. Traders can remain profitable by charging fixed commissions or increasing spreads.
Many traders prefer traderless platforms to trader-based platforms because of their more transparent trading, faster order execution, and greater anonymity. Trading platforms do not reveal the identity of the trader and all orders are executed immediately and anonymously, ensuring fairness.
PGM is a dealer that provides traderless platform services.