What you need to know about ECN brokers
WHAT IS AN ECN FOREX BROKER? – HOW DOES IT WORK?
What makes ECN brokers different from other brokers?
ECN refers to Electronic Communication Network.
It is gaining popularity in the trading field. Investors want to sell and but currencies and ECN brokers help them to do this. Through ECN brokers, traders can access the currency market. Broker provide their traders through liquidity providers. There is high competition in ECN brokers, and they try to give their traders the best price and execution. The primary purpose of ECN brokers is to make a profit. There are two types of brokers. STP broker and ECN broker. IN STP, there is a middle man who performs trading. But in ECN, you can directly access liquidity providers.
Benefits of ECN Brokers
- It would help if you had a good broker to trade on Forex. This is because forex trading is not conducted the same manner as stock and other asset transactions, nor is forex trading conducted on the same regulated exchanges.
- An ECN broker earns through the spread, not from the commission on each trade. In other words, the broker will not get anything if the client is not making it.
- The other benefit of ECN brokers is there are fixed hours to trade, and prices are fed on the broker website, so prices are transparent. So the traders can get the knowledge of costs.
- Privacy is an essential thing for traders. The fact that the broker would only be acting as a facilitator in the market rather than as a market maker would undoubtedly impact the level of confidentiality and secrecy they provide.
- Spreads are changeable. It is your choice to trade on low or high spreads.
- There is no middle man to access to liquidity process. ECN brokers can directly access liquidity providers.
There are some disadvantages of ECN brokers. Some of them are as follow.
- ECN brokers take fixed fees for the transaction. They do not depend on spreads. They take big commissions and are not suitable for miniature trading.
- The deposit fee is high. Although the deposit fee is high, they also provide high-quality service.
- There is no micro lot. If the trader wants to open a position of low cost, then it is not possible.
Why do Ecn Brokers need to be regulated?
The regulated ECN brokers can lower the risks. It protects customers from massive loss if no regulated broker leads to poor services, and even they can scam you.
Who is the Best ECN Broker?
1. Forex.com– Best All-Round ECN Broker. …
2. FXTM– Best ECN Broker for Zero Commissions. …
3. Pepperstone Markets– Best ECN Broker Advanced Trading
4. ThinkMarkets– Best ECN Broker For High Leverage
5. RoboForex – ECN Accounts With 0 Spreads.
Is IG broker ECN?
No IG are not ECN brokers, but they provide quality services and many trading accounts.
ECN Brokers Verdict
ECN brokers can directly link to liquidity providers. There are many advantages of ECN brokers, but these advantages will come over to their disadvantages. However, it is advisable to choose ECN if you are performing high-cost trading. Different brokers are performing ECN services from which FXTM is the best ECN broker.