What are Liquidity Providers?

Liquidity providers are the sources from which your broker receives the bid and asks to fill your order. All other things being equal, more and bigger are better.

The major players have multiple liquidity providers -- banks and large ECNs. The smaller players may just have one, two, or three relatively small providers. Information about a broker's liquidity providers is sometimes held very close to the vest. Some of them advertise, others will simply not tell you any meaningful specifics.

Tip: Do not be overly impressed by a broker who says she has 15 liquidity providers; they may all be very small. One large provider may well be better than several small ones.