How to find MetaTrader liquidity providers

Liquidity is the crucial step in delivering competitive pricing and seamless execution in Forex, crypto, and retail brokerage markets. Working with the top liquidity providers will unlock access to deep markets, excellent client service, and robust technical infrastructure. 

Finding a good MetaTrader liquidity provider requires effort and due diligence, as it’s vital to choose a provider whose offering aligns with the broker’s own targets and strategies across Forex and crypto markets. Only then can a mutually beneficial, fruitful partnership be created. 

In today’s guide, we are going to dive deep into MetaTrader liquidity providers, their types and advantages, and share key recommendations for finding and working with the best MetaTrader liquidity providers on the market.

What is liquidity?

In financial markets, liquidity can be defined as how easy it is to buy or sell an asset without causing a significant price change. 

High liquidity assets mean that there are many market players (buyers and sellers) willing to make transactions with them. Such assets boast fast execution and tight spreads. Low-liquidity assets, on the other hand, execute slowly and have wider spreads.

Sufficient liquidity is required to deal with large volumes and multiple trading strategies efficiently. Little to no liquidity creates worse conditions for traders, which negatively impacts brokers’ volumes, profits, and reputation.

How is MT4 liquidity provided?

MetaTrader 4, or MT4, is one of the top-tier trading platforms widely used by all types of traders, from retail to institutional. 

MT4 liquidity would typically be aggregated through a liquidity bridge that connects brokers to liquidity providers (LPs). These liquidity bridges are intermediaries that consolidate price feeds from multiple LPs and send consolidated data on the market to MT4 servers. 

With this data, brokers can provide their traders with aggregated liquidity pools that offer better pricing and lower risks, such as delays in executing orders. 

Types of liquidity partners 

There is more than one way to categorise liquidity partners, but broadly they are divided into two groups: Tier 1 and Tier 2 liquidity providers. 

Tier 1 liquidity partner

Tier 1 liquidity providers are often considered the best source of liquidity due to their reliability and market depth. 

• Liquidity sources primarily include financial institutions or large banks.
• Typically hold substantial market assets.
• Offer direct market access with high execution speeds and tight spreads. 

Tier 2 liquidity partner

Tier 2 liquidity partners would typically aggregate liquidity from different Tier 1 sources plus smaller market participants.

Usually, Tier 2 liquidity providers: 

• Have wider spreads than their Tier 1 counterparts.
• Offer greater flexibility.
• Have a more diversified market coverage.
• Offer cryptocurrency trading. 
• Cost-effective, scalable solutions. 

Advantages of partnering with Tier 2 providers 

Although Tier 1 liquidity providers are surrounded by a prestigious quality, and working with them might seem more desirable, it’s actually Tier 2 partners that make much more sense for many brokers. 

Why?

Tier 2 partners come with many benefits that make them more attractive to brokerages, especially those that are scaling. 

• Quicker and more streamlined onboarding process. 
• Typically, a higher level of customisation and tailoring for each broker. 
• Cost-efficiency thanks to consolidated pricing and flexible fees.
• Access to diversified liquidity accumulated from several Tier 1 sources. 
• Greater market coverage that gives brokers options right here, right now. 

How to evaluate liquidity providers

Whenever you’re looking for a liquidity provider, it makes sense to dedicate some time and resources to proper evaluations before moving on to signing an agreement. 

Each broker should come up with their own list of criteria and priorities for this process. Still, there are also universal points that every broker, no matter if they’re retail, Forex, or crypto, needs to consider. 

1. Execution quality: Is their execution speed up to your standard? What are the slippage rates? Can you provide your traders with the best pricing possible?
2. Reputation: Watch out for what peers online and offline share about working with a certain LP. 
3. Coverage: A provider needs to offer a comprehensive range of assets, so brokers can meet the demands of their clients. 
4. Transparency with fees and prices: Thoroughly examine potential partners’ commissions, fees, spreads, and any hidden costs that might be written in fine print. 
5. Technology stack: You’d think that everyone in the financial industry has the latest, most robust and secure technology in place, but it’s not always the case. The last thing you need is downtime during crucial trading hours because your partner’s program couldn’t handle the load, the latest upload, or is at capacity. 
6. Compliance: Depending on where you’re based and the markets you operate in, verify that the LP is aligned with all necessary regulations. Bonus points if they go the extra mile. 

Use these criteria as the basis for your evaluations and identify the partners who are not only good on paper but also deliver consistently superior execution. 

What is a MetaTrader liquidity bridge?

MetaTrader liquidity bridges are software solutions that connect MT trading platforms with external liquidity providers. The core goal of Trade Processor, or any liquidity bridge for that matter, is to ensure seamless price feed and order flow. 

Trade Processor is an example of a powerful liquidity bridge that aggregates over 100 LP price feeds. It has built-in risk management tools to ensure smooth order execution, offers data insights right in the familiar interface, works with multiple trading platforms, and supports seamless scaling with no effect on performance. 

Key features of MetaTrader liquidity bridges

A few years ago, a good MetaTrader liquidity bridge could simply act as an intermediary between a broker and a liquidity provider, and not much more. 

Nowadays, much more is required from a liquidity bridge for it to be a success. 

• Smart order routing and execution
• Aggregation of price feeds
• Risk management 
• Real-time monitoring 
• Data analytics on performance 
• Multi-trading-platform support 
• Multi-asset support 
• Easy integration path 
• Transparency in configuration 

Together, these features secure reliable market access, excellent client experiences, and a powerful source of data for future strategising for the broker. 

How to connect to a liquidity bridge 

You can’t connect to the best liquidity provider without connecting to a robust liquidity bridge first. Here is a quick step-by-step guide to connecting to a bridge in any market to meet the expectations of every client you work with.

1. Find a bridge solution that’s compatible with both your MetaTrader platform and preferred LP. 
2. Set up connections via API or FIX to LPs and trading servers.
3. Install and configure the liquidity bridge solution in your MT4 and MT5 environments. 
4. Run an execution test in the demo environment first to evaluate the order flow, pricing accuracy, and risk parameters. Ensure stable performance.
5. Roll out the bridge to your live environment and cross-check compliance with relevant regulatory requirements.
6. Continue to monitor bridge performance and overall system health to maintain good results.

Key factors to consider when choosing a liquidity provider 

Not every liquidity provider is the same. Finding the one that matches best with your requirements takes time and a proper evaluation. 

Consider the following factors to ensure the liquidity provider is fully aligned with your needs as a broker.

1. Choose providers who offer a wide range of assets and cover Forex, crypto, and other essential instruments. 
2. Find out how well potential providers deal with high volumes. They need to handle large order execution seamlessly, without a drop in performance or dramatic price impact. 
3. Opt for transparency whenever possible. If you don’t know how spreads and fees work with the LP, you won’t be able to maintain client trust and maximise your margins, and you’ll put your brokerage at risk. 
4. Ask LPs about their tech stack. The infrastructure needs to be fast, reliable, and innovative to fully support the ever-changing market and integrate seamlessly with MetaTrader platforms.
5. Flexibility and openness to customisation should play a role too. This will indicate how much a provider values their partnerships.
6. Technical support is something nobody wants to deal with or think about, but you might need to use it. Make sure your future partner offers the support and services you need, in the format you require. 

Last but not least, research the reputation of your potential providers. Integrity, strong values, and regulatory compliance are all signs of a perfect partner for a broker.