What is ECN in Forex?
The electronic communication network (ECN) is a communication network linking retail traders and investors with number of liquidity providers through an ECN broker. The connection between the traders and the liquidity provider is done by FIX protocol which integrates the liquidity provider and offers it to the online brokers‘ clients.
The ECN provides traders a system that connects buyers and sellers and executes orders with an ECN server that functions at the middle of the ECN system.
The Advantages of ECN Network:
- Tight spreads variable spreads
- Lower commissions and fees
- An advanced market execution
- Offers traders to trade at all times including outside trading market hours
- Variable spreads
- Trades and orders are private and secure
- Reliable brokers – no interest against traders and investors
What is ECN Broker?
There are two types of forex brokers in the market: The first is an ECN forex broker and the second is a market maker. A market maker broker, same as it sounds, provide liquidity and connects traders on the brokers’ platform and therefore, market maker brokers have more flexibility to change rates and spreads.
An ECN broker, on the other hand, allows traders to interact independently without the broker involvement in market display and execution. ECN brokers offer prices from different participants in the market such as banks, market makers, other traders and brokers in order to display the best bid/ask quotes offered in the market.
ECN brokers function as a middleman in the process of the online forex and CFD trading, meaning these broker will not trade against traders as they pass on the orders to other traders on the ECN network.
7 Best ECN Forex Brokers
Established in 2010, Pepperstone is an Australian broker regulated by top-tier regulators in Australia and in the United Kingdom. Pepperstone is an ECN forex broker connecting bank servers to the MetaTrader 4 servers. The broker offers the EDGE Razor and EDGE Standard accounts which are ECN accounts connected to major liquidity providers, mostly banks.
The Razor account offers tight spreads with a commission charged based on your trade size and overall volume which makes this account popular among scalp traders (A trading method of profiting of small price fluctuation) . The standard account has a slightly wider spread and no other charges so it suits better for beginners.
The global award-winning broker provides traders and investors with a wide selection of products and financial instruments via the MetaTrader 4 and MetaTrader 5. Forex Time was established in 2011 and is highly regulated by CySEC, FCA, FSC, IFSC.
ForexTime offers one of the best ECN trading accounts with full transparency, tight spreads, no dealing desk, and outside market hours. FXTM ECN account is being displayed on MT4 with a leverage of up to 1:1000 (one of the highest in the industry), a minimum deposit of $/€/£ 500 and a commission of $2 per lot. The ECN account offers traders a wide list of instruments including but not limited to 48 majors, minors, and exotics currency pairs, 3 spot metals, and 178 CFDs.
There are three ECN Accounts provided by FXTM
- ECN Account
- ECN Zero Account
- FXTM Pro Account
Founded in 2010, ThinkMarkets is an Australian global provider of FX trading and CFD financial products. Formerly known as ThinkForex, ThinkMarkets is regulated by the Australian Securities and Investments Commission (ASIC) and is also offering ECN accounts for its clients.
ThinkMarkets offers the Standard account, Think Zero account and a swap-free (Islamic) account which can be linked to the market via ECN network. The minimum deposit is $500 with a maximum leverage of 1:500. The broker offers tight spreads for more than 200 financial instruments through the MetaTrader4 trading platform.
Interactive brokers is one of the most diversified brokers in the world offering a huge variety of markets and financial products including stocks, options, futures, bonds, ETF’s, metals, mutual funds, CFDs, EFPs, and hedge funds.
Interactive Brokers also provide a unique technology allowing traders to connect MetaTrader to Interactive brokers and copy all orders and positions.
Interactive Brokers is also a pure ECN broker linking traders and investors with well-known liquidity providers. The broker offers ECN and STP execution as well as a market maker network, so you can expect tight spreads with more transparency over the price you’re paying to execute your trades.
Forex.com is one of the most important brokers in the US. The firm acts as a subsidiary of the prime broker Gain Capital, solely dedicated to Forex Trading. If you are in the US there are not many options for currency trading, mainly because of the strong regulation and all the requirements that a broker must follow before offering their services.
Keep in mind that just like it’s parent Forex.com follows a prime structure on which pricing of the platform and also any type of fee will be based on the traded volume, this means that the cost of trading is directly associated to the activity and the size moved.
Please be aware that the firm offers access to different types of execution like ECN and STPs. For anyone in the US, Forex.com represents one if not the best option in the market.
Pax Forex is an online Forex broker registered in Saint Vincent and the Grenadines offering its clients forex and CFD trading. Pax Forex offers attractive features and terms for traders including tight spreads, low minimum deposit and high leverage of 1:500. Pax Forex is a real ECN/STP broker offering four types of trading accounts: Cent, Mini, Standard, and VIP account.
Established in 2014, TrioMarkets is a fast-growing forex and CFD broker located in Limassol, Cyprus offering forex, metals, indices, stocks, and commodities with low spreads. Trio Markets provide four account types which can be connected through Electronic communication network (ECN) to provide low spreads, transparent market execution, and better market quotes. Those include Standard, Advances, Premium and VIP account.
Compared to other ECN brokers, Trio Markets requires a low minimum deposit of $500 and a leverage ratio of up to 1:300.
Electronic communication network (ECN) account offers traders and investors some major advantages over other forex trading accounts. In trading, small things can make a big difference. Tight spreads, better buy/sell orders, market execution outside of trading hours, transparent and secure trading, brokers’ reliability, etc – these factors can make the difference in your day trading. For those who have concerns over brokers’ price manipulation, ECN broker can provide you the peace of mind that you receive the best quotes, spreads and market execution.
Whether you are a new trader or a professional experienced trader, you should consider choosing one of the best ECN forex brokers.
ECN Forex FAQ
What is ECN account in MT4?
One of the features that MetaTrader 4 provides is a bridge to connect interbank foreign exchange and forex traders with the broker functions as the middleman in the process. The MT4 server is one of the best tools for a forex broker to link liquidity providers and traders.
What is an ECN zero spread forex broker?
Zero spread forex brokers are usually STP or ECN brokers that offer the connection between liquidity providers and forex traders. By doing that, these brokers can provide a no difference quote between the bid and ask. Some of the brokers charge an additional fee while some offer a no-charge for zero spread ECN account.
What is the difference between ECN and STP account?
The big difference between ECN broker and STP broker is that a true ECN transfer all trades through the ECN network while STP function as ECN and STP broker and can choose what market executions to pass on the liquidity provider. For traders, you cannot know what are the trades that pass through a liquidity provider.