ECN brokers

What are ECN brokers?

Usually, brokers on the exchange act as intermediaries between sellers and buyers. Those of them who seek to minimize their participation by connecting traders directly to conduct each transaction are called ECN brokers, since they use an electronic communication Network. This page contains the rating of the best Forex brokers with ECN accounts.

It is obvious that with perfect trading in the market, there are completely no overhead costs for the seller and the buyer. But in reality, this is not possible, since transactions require a broker (from the English broker-broker, intermediary), who receives his profit from this activity. He acts as a party to each transaction and offers clients to carry out trading operations in which his profit is already embedded.

In this case, there can be two options for executing client trading orders:

• When the execution of the trader's order is guaranteed, but the price at which the transaction will be executed is not guaranteed. This version of execution is called "market execution". Depending on the circumstances, the asset price may be worse or better than the requested price. For clients, this means that there is "slippage»;
• The broker guarantees the strike price, but may not execute the order at all. This type of trading order is called "instant execution". A trader may be offered to execute an order at the current price, i.e. with a "requote".

In both cases, the usual intermediary acts against the client and offers him to trade with a spread, that is, at a price that differs from the best offers on the market, in order to get his income in this way. The advantage of a broker with ECN accounts is that the fact that it connects the seller and the buyer directly, providing the asset value that is actually on the supply and demand side. This is possible due to the presence in a single ECN trading network of a large number of large and small clients (banks, exchanges, funds, large companies and individual traders), which together provide the best liquidity and optimal trading conditions.

Advantages of an ECN forex broker

Working in an ECN network, a brokerage company does not need to change prices arbitrarily and thereby increase the spread. Its profit consists exclusively in a fixed Commission, and this ensures complete transparency of the trading process, the inability to play against the client or in any way modify the real flow of quotes. But a novice trader you need to understand that there is no guarantee the constant narrow the spread. At the time of news release, it can be much higher than the one provided (with slippage and requotes, but unchanged) by standard accounts. The choice of a broker must be based on your personal trading style and strategy.

Top 3 best ECN forex brokers in 2023

We have selected 3 best Forex brokers with ECN accounts on Forex. The main factor of choice was the reliability of the broker and the minimum spread when trading on major currency pairs.