The constant volatility of ECN networks, along with the presence of large market players ensures that traders can open a large position in the market without the worry of any requote. Sometimes lower prices can be seen, a Forex spread of 0 or less. Traders have a choice of what bid and ask prices to use for their orders, since the pricing is being provided by not just one, but several liquidity providers. This process helps the investors get the best price for their trades both ways. ECN brokers are going to make sure that you get the tool and research materials that you need. ECN Forex brokers also offer several ECN account features that allow traders to take complete advantage of the markets. Brokers may come up with innovative trading features and great resources such as trading tutorials, live news feeds, market analysis, and trading signals, all of which can contribute to an excellent user experience.
DailyForex compares ECN Forex brokers so that you can find the right ECN broker for your budget and strategy. Find the best ECN Forex brokers now.
No Dealing Desk brokers are able to offer the best prices from the markets by receiving a live feed from several liquidity providers, which keeps the spreads low and competitive. No Dealing Desk trading not only involves competitive spreads, but it also involves the largest liquidity in the market, which is highly suitable for Direct Market Access DMA trading. A DMA Forex broker, through its partnership with leading liquidity providers, should be able to offer a highly favorable trading environment; however, the spreads and liquidity are never fixed.
In the case of high volatility, the spreads can change their value suddenly, and orders are only filled according to the specific market situation. No Dealing Desk brokers may induce partial fill of orders, and such type of trading can induce large slippages. ECN trading conditions are highly preferred by professional traders and institutional investors, primarily due to the open liquidity and direct market access that does not involve any conflict of interest with the broker.
ECN networks show real-time quotes, orders, and the most competitive spreads in the market, thereby helping traders to reduce their cost of trading.
While ECN trading is highly preferred for large traders, there are slight drawbacks to ECN accounts, which includes a commission per trade, partial order fills, and massive slippages. Most STP Forex brokers try to connect their traders to the interbank liquidity pool by offering direct market access trading, but in a significant majority of STP accounts, the brokers may connect their STP traders to a Market Maker or dealing desk protocol.
STP accounts may be suitable for smaller traders, especially since there is a significant lack of slippages or commissions. On the downside, STP trading may involve requotes, price manipulation, high spreads, and brokers may choose to offer a market maker account to its clients — MTF Multilateral Trading Facilities might also be considered as a type of a broker protocol, but this type of exchange activity is not regulated at all. MTF serves as a self-regulatory exchange for financial instruments, where buyers and sellers use unconventional investment platforms for trading financial products that are usually not available at regulated mainstream exchanges.
Besides having a thorough knowledge of the types of brokers and the trading protocols, it is also important to know how to judge them and to tell the difference between the good ones and the bad ones.
Our following Forex broker comparison guide can help you to determine the most important factors to distinguish FX brokers from each other. The origin and the history of a broker help us to see how reputable the company really is, and enables us to learn how this broker has operated in the market over the years.
Meanwhile, the country of origin, as well as the jurisdiction where the broker is located also matters due to the regulatory and trading restrictions that are common in certain geographic locations.
Citizens of certain countries are prevented from exercising complete freedom on Forex trading, most notably for traders from the US, and such traders cannot use brokers from other specific nations due to legal or regulatory policies. Therefore, it is essential for traders to particularly careful about the geographic location of a Forex broker while comparing the different options in the market.
Forex trading platforms are a critical component in numerous Forex broker comparisons, and a significant majority of comparison guides will have a dedicated Forex platform comparison and a review section to offer great insights into the platform options.
Whether a trader is looking for a browser based platform, or if he wants to adopt a professional approach by downloading a trading software to install on his PC, brokers should always be competitive and innovative in their approach, or else risk losing their intended audience. These days, Forex trading software is also available for use on mobile devices, and it is likely that traders will all be able to trade on the go through simplified mobile trading apps that are available for most third-party trading platforms and proprietary trading software through the respective mobile app stores.
Bonuses may also be considered as one of the striking features that alleviate the status of a company, making a broker different or better than its immediate competitors in the eye of a trader.
Traders are known to compare and select brokers depending on the magnitude of bonuses that are offered to them according to the size of their investments. However, we would suggest that you do not use the bonuses on offer as your main factor for comparing brokers and for investing with a company. Some trading sites may offer excellent special promotions and offer but may otherwise have low-quality services that are best avoided.
Making a comparison of the various forex brokers is absolutely crucial for all traders. It helps traders to estimate the reliability and performance of a company and to find out whether they can be trusted for the safety and security of trading funds. Comparing Forex brokers will not only help in avoiding all the risks in the market, but it also gives a chance for a trader to browse through different options in the market to choose a highly reliable Forex trading service that offers top-quality account packages.
Although the list of forex brokers is quite big, you can use our factors as mentioned above in your Forex broker comparison strategies to find which broker is best for you and your trading strategies. Maximum Trade Size — ECN brokers usually offer much higher maximum trade sizes, as they at least theoretically do not have to worry about processing any order through a dealing desk.
ECN brokers, if they specify maximums, tend to place them at much higher levels. Although an increasing number of ECB brokers do now allow trading in microlot sizes, a few still do not, so it could be an issue if you prefer to trade in microlots.
A true ECN broker is simply defined as a broker that plugs your orders into a network where it is automatically matched to a matching order from another client or liquidity provider.
This is the textbook definition to work from. Most brokers claiming to be ECN brokers are probably telling the truth about this at least, although if you see large spreads, spreads that never seem to really vary, or continuously slow execution, they are almost certainly not. The network is only as good as its source. To be regarded as a real ECN broker, the liquidity provider should really be a tier 1 bank.
We must wonder how often this is really the case, and why many brokers that advertise themselves as ECN brokers are so tight-lipped about which liquidity providers they use! When the first ECN brokers started appearing, bank traders started to ask how orders for minilots let alone microlots could possibly be sent straight through to tier 1 banks for processing.
Bank traders will tell you that at this level, trade sizes are usually in minimums of ten or so full lots. The final question is, does it really matter? If a broker is at least trying to match orders directly, there is not much of a conflict of interest, potential or otherwise. If you benefit from a low cost of trading and relatively fast execution, then why not be happy with what you have got.
Choosing an ECN broker is not very different from choosing any broker. There are not many special factors to watch out for at ECN brokers that differ from what should be the usual considerations. When choosing any Forex broker, you should start from how much money you want to deposit, what kind of instruments you want to trade, how often you want to trade, and where you are located.
Beginning with these three factors, you should be able to eliminate several brokers from your list of candidates. Starting with location, you might feel more comfortable with a broker located in your own country or a nearby country , or is in a country that speaks the same language as your or which has a similar legal system. If you are a U. If you live in the United Kingdom, you might want a U. This is probably the easiest place to start and helps you narrow down the list considerably right away when choosing a Forex broker.
The next step to consider is regulation and the safety of your deposit. This might not matter so much to you if you only intend to deposit a relatively small amount of money that is not very important to you. If not, though, this is a very big issue. Some countries have a well-developed culture of financial regulation enforcement, which is always reassuring, and are just not places where the big fraudsters can thrive.
Another big issue to consider is whether any protection is offered on your deposit. This means that if you deposit that amount or less with a broker regulated by and based in the United Kingdom, if they steal from you or cheat you or even just go bankrupt, you should eventually receive your deposit back from the government there.
This is a significant advantage, and provides a lot of reassurance. If your deposit is a significant sum, you should seriously question whether it is wise to deposit it anywhere that does not offer government-backed deposit protection. You also should be biased towards reputable financial centers and away from tiny islands you never heard of before! The third factor to think about is the cost of trading.
One way to compare spreads is to open demo accounts at each of your candidate brokers to see what their spreads really are. One potential problem with this strategy, however, is that brokers have been known to make conditions in their demo accounts, including spreads, significantly better than those which prevail in their real money accounts.
Fortunately, there are a few websites which compare the spreads of real money accounts in real time across a range of different brokers, so looking here is going to be a good idea.
Another serious factor to consider in choosing a broker is your style or intended style of trading i. Are you or are you going to be a scalper, day trader, swing trader or position trader? If you are making few trades but leaving your positions open for several days or even over weeks and months, you should consider how competitive are brokers are in terms of their overnight financing rates which are generally charged each day against positions left open at 5pm New York time.
For position traders, these rates can make more difference to overall profit and loss than the spreads charged, at least up to a point. However, if you are going to be leaving trades open for only minutes or hours but making many more trades, the spreads become a more influential factor, and overnight financing may not be an issue at all.
ECN Forex Broker Comparison
48 rows · ECN Forex Brokers ECN forex broker comparison tool provided . The Advantages Of ECN Forex Brokers. In the Forex market, there are many things you have to know in order to navigate your way to making successful trades. Our professional traders have tested and reviewed the best ECN forex brokers and share their results, ratings and exclusive background information with you/5(51).