A step to answer the question “What is ECN broker”

Posted by on December 25, 2019


Have you ever asked the question “What is ECN broker?”. This article will make you more understanding of this. Do you want to execute trading very fast & can trade more than 10,000 dollars? ECN is your answer. However, in case you want to get started with a small investment & a friendly-user interface that you can need to the social networks. Also, this article will tell you more about the ECN brokers’ forex pros and cons.

What is ECN broker

What is ECN broker: a full definition?

ECN brokers stand for Electronic Communications Network that is network technology taken by many brokers to keep track of their customers with a large participant from the exchange markets such as Global bank, financial institution, prime broker & other examples as the liquidity provider. ECN broker will aggregate buying & selling prices of currency from those providers of liquidity by picking the best brokers to be introduced to their customers. 

This pattern is very clear & most of the ECN brokers don’t get from the trading spreads but in terms of charging commissions on the volume of each trade. Sometimes, the ECN broker is called Straight Through Processing (STP).

What is ECN broker: The way ECN works?

ECN brokers give their customers a transparent and direct access for all interbank markets. The providers of Liquidity such as Prime broker, Global Bank and financial institution… provide the prices to ECN brokers whose system picks the highest price to offer the best spreads automatically. 

After that, it’s up to every model of personal broker’s business, those prices can be present directly to the customers (if the brokers earn via some commissions of trade amounts) or a tiny markup is fed to trading spreads (about 1 pip). 

When their customers decide to put each order, it will be sent via the brokers’ systems (bridge) directly to liquidity providers giving the highest prices. Those orders were sent secretly, so all information of the traders, their stop & order limit can’t be identified by executing parties. Rate providers will send their confirmations back for a short time afterwards.

What is ECN broker: ECN Brokers’ Benefits?

  • Execute the orders fastest
  • Without conflicts of interests: brokers will not trade against all of you
  • Without interventions & execution delay
  • Transparencies – driven spread
  • High liquidities
  • Scalping, news of trading & of hedging
  • Trading is put secretly
  • Without disconnects in the events of news

What is ECN broker: ECN Brokers’ disadvantages?

  • Need money to get starting with trading
  • Trading Platforms and interfaces might be hard to user & unfriendly with beginners
  • Spreads might become higher when they’re affected by the markets.
  • High costs of trading
  • No small accounts (if the brokers aren’t a bank)
  • Smaller leverage -> Learn the best leverage for forex.
  • Without guarantees to stopping loss executions
  • Executing prices aren’t sure because the real trading market can vary very fast.
What is ECN broker

ECN broker doesn’t give a high leverage such a maker can do. ECN will give the leverages up to the rate of 1:100 because they’re putting the orders in right interbank markets, not separate liquidity pools as market trading makers can do. That’s reason why the required deposit costs 1000 dollars – to trade just 1 lot. ECN broker doesn’t have any micro trading accounts. They permit their traders to trade in a fractional lot size – 1/10 or just a dollar for a pip.

I hope that this article will make you to understand of What is ECN broker. Also, you can be aware of their benefits and disadvantages.




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