ECN Forex Trading: Why Should You Trade With An ECN Broker?

ecn forex trading

ECN stands for Electronic Communication Network and is truly the future of foreign exchange markets. ECN can be best described as a bridge between smaller market participants and its liquidity providers through a FOREX ECN broker.

ECN acts as a bridge between market participants and liquidity providers. ECN, also known as alternative trading system (ATS), is basically a computerized network that allows trading in stocks and currencies outside of traditional exchanges.

It is important to remember that transactions were performed manually before the 1970s. Only a small amount of electronic trading was possible in the 1980s. Reuters Dealing, an advanced communication system that was developed by Reuters at the time, enabled almost all electronic trading to take place.

¬†“The goal of a successful trader is to make the best trades. Money is secondary.”

Electronic trading systems were first developed in the early 1990s to match buyers with sellers and quickly became the currency price benchmark. These Electronic Communications Networks weren’t invented in the early 1990s. They have been around since the late 1960s, but they were not used for currency trading until the late 90s.

First things first – Get to know your broker

Forex is a popular market for small traders. Gains can be made even from the smallest price fluctuations in currency pairs. Foreign exchange trading is not regulated, unlike trading shares and assets.

It is a transaction between buyers and sellers in different parts of the world, via an over-the counter (OTC) marketplace. To access this market, you will need to use a broker.

Because Forex trading is decentralized, the choice of the right broker can make the difference between success or failure. There are many brokers on the Forex market that offer similar products and services. However, it is important to be able identify the ecn brokers review before you start Forex trading.

There are two types of Forex brokers: Market Makers or ECN Brokers. The Market Makers, as the name implies, are brokers who set the ask and bid prices using their own systems. This is called’making the market’. Potential investors can view the prices they set on their platforms and open or close trading positions.

ECN – The Purest Forex Broker Available

The Electronic Communication Network (ECN), brokers, unlike the Market Makers do not make any profit on spread differences, but they charge a commission for positions. Their clients win is their win, or they wouldn’t have any profit.

ECN Forex Brokers

ECN brokers, financial professionals who use sophisticated electronic networks to connect their clients with other market participants, are called financial experts. ECN brokers can offer tighter bid/ask spreads by consolidating quotes from multiple participants.

ECN brokers not only serve large financial institutions and traders in the market, but also offer individual trading services. ECNs allow their clients to trade against one another by sending bids or offers onto the system platform.

ECN’s main attraction is the anonymity of both sellers and buyers in trade execution reports. ECNs are more like a live exchange, offering the best bid/ask rates among all currency quotes.

ECNs allow traders to trade at lower prices. ECN brokers can also offer prices from various liquidity providers. ECN brokers offer a more transparent and efficient trading environment, which adds to the appeal of E-trading.

The ECN Advantage – Why you should trade with an ECN broker

ECN brokers offer many advantages. In fact, traders are eager to use them. ECN brokers can help traders get ahead of their top counterparts by offering a variety of significant benefits. These are the top benefits of an ECN broker.

1.Anonymity and Confidentiality Secrecy

When dealing with Forex trading, you’re often an open book. However, confidentiality and privacy are very important when you choose to work with an ECN broker. This is due to the fact that an ECN broker will only be a broker in the market, not a market maker.

2.Variable Spreads

An ECN agent is available to traders and they have a dedicated account that allows them unrestricted access to the market prices. Trades can be made on extremely low spreads, as prices are affected by supply and demand.

3.Instant Trade Execution

Forex dealers can’t afford to compromise on this feature. ECN brokers ensure that every trade is executed efficiently. ECN brokers do not require clients to trade with them, but rather use their network to place orders. This alternative method allows for better trade execution.

ECN Forex Brokers

4.Liquidity and Access to Customers

ECN agents work on a model that allows anyone to trade in an international liquidity pool of competent, viable and controlled financial institutions. An ECN broker also offers transparency due to the way that information is shared. ECN agents have access to the same market data as traders, so transparency is assured for fundamental market prices from multiple liquidity providers.

5.Trade Consistency

Trading consistency is one of the main benefits of an ECN broker. Forex trading is very consistent. A break between trades is not necessary. An ECN broker allows you to trade during news events, which can create a real stream of activity. Forex price volatility is also an opportunity that can be used by traders.