Why You Should Use ECN Fx broker

By Linda Wainman

In full, ECN means Electronic Communications Network. ECN Forex broker is therefore a special type of forex broker that additionally allow several different clients' orders to interact with each other. This kind of interaction is very beneficial to Forex traders. Through ECN, brokers therefore provide special marketplace designed to allow traders to directly execute trades between each other. Apart from allowing different clients' orders to interact, the ECN Forex Broker shares other features in common with other type's Forex of brokers.

Features Of ECN Forex Broker

Depth of market display

This feature does not allow the dealer platforms to display the available market liquidity. The FXCC is only allowed to show volumes which are available for the bid and offer at their best price.

Anonymity

They allow anonymity on dealer platforms. The dealer thus knows exactly your trading style and tactics, open positions. He can also use the information provided for his personal advantage.

Allowance To Trade During Economic Releases

All traders are allowed to execute trades irrespective of the size of their trade and submit new orders during significant economic releases. During economic releases and other unusual market volatility, the bid/offer spreads increases.

Client-To-Bank Trading

Client-to-bank trading is allowed by ECN Forex Broker especially on the FXCC ECN enabling the trader to execute trade instantly by using prices already streamed FX banks.

Benefits Of Using ECN Broker

Anonymity of your trades

An ECN broker uses anonymous transactions when executing client trades. They ensure that the client's trades and account identity are not shared out so the trader cannot be traced back. Most traders like this protection of privacy hence would choose ECN brokers.

A Chance To Make Your Own Market

With the ECN Forex Broker you have everything it takes to be your own market maker. You can ultimately make your own market or simply act as a market maker when using these brokers. They allow you to place an order just between the bids and ask spread.

Great Price Volatility

ECN brokers do not use fixed prices. You can experience several large price swings in a short time especially during volatile trading periods. During these volatile periods, you can make huge profits within a short time.

Improved execution of trades

The design of ECN provides the best and most advanced trade execution. You should keep in mind that you are not trading direct with your broker but just using their network. The network is solely focused on matching up all the orders while the opposite side is held by a different market participant.

News And Event Trading

This type of trading is very ideal for news and event trading. This is very useful when the market is become extremely volatile. You have access to many institutional liquidity providers in the market. This access enables you to successfully fill orders even in volatile situations.

During highly active trading periods you are not tied to spreads

With ECN, spreads are not fixed hence you will not be tied during highly active trading periods. Every currency pair will continuously display varying spreads which depends solely on actual trade volumes. Spreads also depends on the available market liquidity enough to support trade. This is because the ECN broker usually gets their pricing feeds from different multiple institutional markets.

Pros and Cons of ECN Forex Broker

Pros

All the transaction are carried out over-the-counter (OTC) worldwide.

Individuals with little credit can greatly participate in the Forex market and make profits.

ECN brokers use currency prices from different varying market participants such as banks and market makers.

They use the best bid/ask quotes they can afford to offer basing on these prices

They show decreased risks of price manipulation since they don't determine prices

Cons

They don't use decentralized system so exchange rate of currency pairs can experience significant fluctuations.

Forex traders are enforced to pay all the commission for each and every transaction.

It is harder to calculate stops in advance because they use variable spreads between bid/ask prices.

Most ECN Forex Broker use trading platforms which are less user-friendly

Conclusion

Due to their great connectivity features, ECN Forex Brokers are the best choice that you should choose if you want to be successful with forex trading. Besides the free interaction between client orders, these brokers offer a wealth of other features that make your trades hassle-free.

About the Author:

Every investor can easily benefits from low spread as well as a true ECN account accompanied with DOM data is the easiest method to achieve it. Have a look at my top recommended ECN broker in Switzerland at Dukascopy forex broker. In case being not-regulated doesn't hassle you, take a look at another great suggested ECN broker on A review of FXOpen.