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ECN Forex Brokers

Fusion Markets Review

Regulators: FSA, ASIC, VFSC

Min Deposit:

Avg Returns:

  • Headquarters: Australia
  • Foundation Year: 2017
  • Max. Leverage: Up to 1:30 (ASIC), up to 1:500 (VFSC)
  • Deposit Options: Visa, MasterCard (credit & debit), PayPal, Skrill, Neteller, Fasapay, Jeton Wallet, Perfect Money, Online Naira, Doku, Cryptos or bank wire
IC Markets Review

Regulators: FSA, ASIC, CySEC

Min Deposit:

Avg Returns:

  • Headquarters: Australia
  • Foundation Year: 2007
  • Max. Leverage: 1:500 (FSA), 1:30 (ASIC), 1:30 (CySEC )
  • Deposit Options: Wire Transfer, Neteller, Skrill, Credit Card, PayPal, Visa, Mastercard, Union Pay, Bpay, Broker to Broker, Poli, Klarna, Local Deposit
FXTM Review

Regulators: FCA, CySEC, FSCA, FSC, CMA

Min Deposit:

Avg Returns:

  • Headquarters: Cyprus
  • Foundation Year: 2011
  • Max. Leverage: up to 1:2000
  • Deposit Options: Credit Cards, e-Wallets, Bank Wire and Local Transfers
Interactive Brokers

Regulators: CFTC, SEC US, IIROC

Min Deposit: $0

Avg Returns:

  • Headquarters: United States
  • Foundation Year: 1977
  • Max. Leverage: 1:78 (CFTC), 1:78 (IIROC), 1:78 (SEC US)
  • Deposit Options: Wire Transfer, Bank Card (Debit/Credit), Payment apps, Cryptocurrencies
Exness Review

Regulators: FSA, FSCA, BVI FSC, FSCM, CMA, FCA, CySEC

Min Deposit: $10

Avg Returns:

  • Headquarters: Cyprus
  • Foundation Year: 2008
  • Max. Leverage: 1:500 (FSA), 1:500 (FSCA), 1:1000 (BVI FSC), 1:499 (FSCM), 1:2000 (CMA), 1:30 (FCA), 1:30 (CySEC)
  • Deposit Options: Cryptocurrencies, Wire Transfer, Neteller, Webmoney, Skrill, QIWI, Credit Card, PerfectMoney
FP Markets Review

Regulators: ASIC, FSA, FSCM, FSCA, CySEC

Min Deposit: $100

Avg Returns:

  • Headquarters: Australia
  • Regulated By: ASIC, FSA, FSCM, FSCA, CySEC
  • Foundation Year: 2005
  • Min. Deposit: USD 100
  • Max. Leverage: 1:500
  • Deposit Options: PayPal, Wire Transfer, Skrill, Neteller, Credit Card, Bpay, Broker to Broker, Debit Card, PayID
Tickmill

Regulators: FCA, FSA, CySEC, FSCA

Min Deposit: 100 US dollars

Avg Returns:

  • Headquarters: Seychelles and UK
  • Regulated By: FCA, FSA, CySEC, FSCA
  • Foundation Year: 2014
  • Min. Deposit: $100
  • Max. Leverage: 1:500
  • Deposit Options: Wire Transfer, Neteller, Skrill, Credit Card, PayPal, Visa, Mastercard, Przelewy, Sofort, Rapid Transfer
Pepperstone Review

Regulators: ASIC, FCA, DFSA, SCB, CMA, CySEC, BaFIN

Min Deposit: $200

Avg Returns:

  • Headquarters: Australia
  • Regulated By: ASIC, FCA, DFSA, SCB, CMA, CySEC, BaFIN
  • Foundation Year: 2010
  • Min. Deposit: $200
  • Max. Leverage: 400:1
  • Deposit Options: Bank Wire (BankTransfer/SWIFT), VISA, MasterCard, BPAY, Local Bank Transfers, M-Pesa, Neteller, PayPal, Poli, Skrill, UnionPay

ECN means “Electronic Communication Network”. It’s a system for trading forex. It works by sending and completing orders outside of the broker’s office. Brokers who use this system are called ECN forex brokers. They use ECN technology to handle orders for their clients. People often get confused about ECN brokers and DMA brokers. They’re similar in some ways but different in others. Both ECN and DMA brokers don’t have a dealing desk. This means they don’t trade against their clients. ECN brokers match trades between different market players. They don’t trade against you. ECN brokers usually have narrower spreads compared to regular brokers. However, they charge clients a fixed commission for each trade.

Now, let’s look at how it works, its benefits, and its downsides.

Understanding the ECN

The ECN is an electronic system where buyers and sellers meet to make trades. It shows information about orders and helps complete these orders. The system matches buy-and-sell orders on the exchange. When it doesn’t have specific order details, it shows prices based on the best buying and selling offers on the market.

Understanding ECN Brokers

An ECN helps investors trade stocks outside regular hours, which is useful if they can’t trade during the day or if they like the flexibility. It also avoids higher fees compared to traditional brokers. If you’re worried about privacy, an ECN can keep your identity private, which is good for big transactions.

ECN brokers don’t send your orders to market makers. Instead, they match buyers and sellers electronically. Using an ECN broker means lower fees and more time to trade because of how it works.

How does an ECN broker work?

ECN brokers make their money through the difference between the buying and selling prices. They prefer traders who are active and successful because they make more trades, increasing the broker’s volume. These brokers compile a list of the best prices for buying and selling from big financial institutions and banks. They then match trades with the lowest price differences and the best possible prices, regardless of where they come from.

Essentially, an ECN broker acts like a middleman between buyers and sellers, aiming to provide fair deals without manipulating prices, though they may use market conditions to your advantage.

Characteristics of ECN Brokers

ECN brokers are special because they use a system called ECN to help people buy and sell stocks. With ECN brokers, trading costs less and you can trade more often.

These brokers don’t send your orders to other big companies. Instead, they use computers to find someone who wants to buy what you’re selling or sell what you want to buy.

ECN brokers can’t bet against you because they match your trades with other people’s trades. They charge a small fee for each trade, but the good news is, the fees are usually lower than what other brokers charge.

Pros and Cons

Cons

Points Details
Lower Bid and Ask Spreads When you’re trading forex, there’s always a difference between the price you can buy at and the price you can sell at. This difference is called the spread. ECN brokers match your orders with the best available prices from all the traders in the market. This means you usually get tighter spreads, which can save you money when you’re entering or exiting trades. Traditional brokers often have wider spreads, which means you might end up paying more.
Flexibility With ECNs, you can trade outside of regular market hours. This means you’re not limited to trading only when the stock exchange is open.
Speed Trades happen quickly with ECNs, and the spreads are usually smaller. Since many different traders are competing to fulfill orders, they try to offer the best rates to attract business.
Flat Commission Rate Instead of making money from the spread, ECN brokers usually charge a flat fee for each trade. This can be simpler and more transparent than dealing with variable spreads.

Cons

Points Details
Fake ECN Brokers Some brokers claim to be ECN brokers when they’re not. This deception can lead to investors losing money. Many dishonest brokers pretend to be ECN brokers to take advantage of the benefits of electronic communication networks over traditional systems. It’s essential for investors to be cautious and do thorough research before choosing a broker.
High Starting Deposit Requirements ECN brokers often require high minimum deposits because they earn their income mainly through commissions. They prefer clients who trade larger volumes, so they set minimum deposit sizes ranging from $100 to $1000. It’s recommended to start with a deposit of $10,000 or more for optimal trading conditions.
Commission Fees ECN brokers charge commissions based on trading volume. While this is understandable, it can become expensive for traders with large trading volumes. However, considering the benefits of ECN trading, these fees are generally justified.
Market Order Execution When traders execute market orders, their trades are executed at the current market price. However, due to high market volatility, the price may change between placing the order and execution. This can result in trades being executed at a slightly different price than expected. Though the chances of this happening are low, traders should be aware of the possibility.

Benefits

Using an ECN forex broker has many benefits, including:

  • Low Spreads: The prices traders see are directly from the interbank market, so spreads are low because they’re not increased.
  • Transparent Pricing: What you see is what you get. ECN forex brokers aren’t directly involved in trading, so there’s no delay or change in prices.
  • Fast Execution: Trading engines are quick and designed for fast trades, including the use of algorithmic software.
  • Suited for High Volume Traders: ECN forex brokers work well for traders who make a lot of trades quickly, like scalpers or those using high-frequency trading algorithms.

Drawbacks

  1. ECN brokers have some downsides:
  2. Spreads might not stay the same: While spreads (the difference between buying and selling prices) can be small with ECN brokers, they can change a lot, especially when the market is very active.
  3. Commissions are charged: Traders have to pay fees for both opening and closing trades on ECN broker platforms.

Top 10 ECN Brokers for 2024

Here’s a list of Forex Brokers that offer true ECN trading accounts:

  1. FP Markets: Known for lightning-fast trades averaging just 40 milliseconds. They offer super tight spreads with a standard commission of $2 per trade. You can trade over 70 currency pairs, including some rare ones, with leverage up to 1:500 (but only if you’re under FSCA regulation).
  2. Pepperstone: Highly rated for forex trading, offering razor-thin spreads on selected pairs with commissions at $3.50 per trade. No minimum deposit required, and they support various payment methods.
  3. Tickmill: Known for its low spreads starting from 0.0 pips and competitive commissions. You can start trading with just $100 and get leverage up to 1:500.
  4. IC Markets: Offers tight spreads from 0.0 pips and fast execution speeds, ideal for active traders. Minimum deposit is $200 with leverage up to 1:1000.
  5. FXTM: Provides two ECN account options with deposits starting at $200. They offer high leverage and professional accounts with zero commission for bigger traders.
  6. Eightcap: Allows opening an ECN account with no deposit fees starting from $100. They support over 800 financial markets and offer free demo accounts.
  7. Interactive Brokers: Great for seasoned US traders with advanced trading tools and over 100 forex pairs. They offer low commissions and industry-leading spreads.
  8. Exness: Trade top financial instruments with no spreads and low commissions. Minimum deposit is $1, and eligible clients can get unlimited leverage.
  9. InstaForex: Offers 0.0 pip spreads on major pairs with low commissions. You can start trading with just $1 and choose from over 30 payment methods.
  10. RoboForex: No minimum deposit required for ECN accounts, with competitive commissions and spreads. Leverage up to 1:500 is available.

Other ECN Brokers

  1. Fusion Markets: Best ECN broker in 2024. They have low trading and non-trading fees. Opening an account is fast and easy. They provide great customer service.
  2. GO Markets: They offer low forex fees. Opening an account is fast. They also provide great educational tools.
  3. TMGM: They offer low forex fees and make opening an account easy and fast. They provide free deposit and withdrawal options.
  4. FXTRADING.com: They offer low forex fees and make opening an account easy and fast. They provide free deposit and withdrawal options.
  5. Global Prime: They have low forex fees and make opening an account easy and fast. They provide free deposit and withdrawal options.
  6. Eightcap: They offer low forex fees. Opening an account is seamless and quick. They provide free deposit and withdrawal options.
  7. MultiBank: Opening an account is quick and easy. They offer free and varied deposit and withdrawal options. Their customer service is fast and helpful.
  8. Moneta Markets: They have low forex fees and make opening an account easy and quick. deposit and withdrawal processes are seamless.
  9. Royal: They have low non-trading fees and offer many deposit options. They provide great research tools.

ECN Brokers vs. Dealing Desk Brokers

Today, brokers fall into two main groups.

These are:

  1. Dealing Desk (DD) brokers.
  2. No Dealing Desk (NDD) brokers, which further divide into STP and ECN brokers.

DD brokers act as market makers for their clients, while NDD brokers aim to match buyers’ and sellers’ orders without being directly involved in the transactions.

Brokers help people access the foreign exchange market. They may have offices in different places and are usually registered. Traders use their platform to trade directly with ECN brokers and access the global market. When traders make a profit, it’s taken from their account, and when they deposit funds, it’s added to their account.

Dealing desk brokers act as middlemen, which is their main difference. They typically work with individual clients who have relatively small funds. This is why new Forex traders often pay attention to dealing desk brokers.

ECN, or Electronic Communication Network, is an online system that allows customers to place orders. It’s used by many market players and helps orders from different brokers connect. It ensures that trades go to a global platform where everyone competes by betting on trade outcomes. Users of the system communicate and get the best deals for their orders. All trade orders are matched in real-time. ECN brokers usually charge a small fee.

What do ECN Forex brokers do?

ECN forex brokers do a few important things in the market. Let’s take a closer look at what they do.

A) Aggregating Prices and Sending Orders for Processing

ECN forex brokers gather price quotes from different banks, which are like shops that offer money for trading. They then send these prices to their clients. Clients can choose the best prices for them. When a client chooses a price and clicks to make a trade, the broker sends the trade request to the bank with that price. The broker doesn’t interfere with the trade.

B) Showing Depth of Market

ECN forex brokers also show something called a Depth of Market book. It’s like a list that shows the prices people want to buy or sell at, and how much they want to trade. For example, you might see a range of prices for a currency pair like EUR/USD. Between the highest and lowest prices, there are buy-and-sell orders. There are also different amounts of trades happening. This information helps traders see where lots of trading is happening and what type of trading is going on. It can help predict where the market is heading.

C) Technology Provision

When you trade on ECN platforms, you need different technology compared to what market makers provide for regular traders. Traders on ECN platforms get special tools for faster trades and quick executions. The trading platforms are made separately and are good for combining prices and sending orders.

How to Choose the Best ECN Broker

Finding a genuine ECN broker can be tricky, especially if you’re not sure where to begin. Here are some tips to help you find the perfect ECN broker for your needs:

– Check if the broker is regulated by contacting organizations like the FCA, ASIC, or CySEC.

– Make sure your chosen ECN broker is legally identified. This ensures their services comply with the regulations in your country. Skipping this step could mean risking your money on an unreliable investment.

– Look for a broker that is clear about its commissions, trade terms, and how it executes trades. Make sure the company has strong security measures to protect your personal and financial information.

– Check if the broker has good customer service with a team that responds quickly to help you.

– Know your order limits, including the number and size of orders you can send to your broker, as well as the total size of your positions. A true ECN broker won’t restrict your investment amount because they earn more commission when you invest more. If your broker pressures you into specific deals, they might not have your best interests at heart and could be illegitimate.

– Make sure the broker has access to a lot of liquidity providers to ensure fast and smooth transactions.

– Pay attention to the spread and commission fees the company charges, as they affect how much money you make.

– Look for brokers that offer advanced trading tools like social trading, algorithmic trading, and auto trading.

– A good ECN broker should provide educational materials like market research, trading guides, and webinars.

– Your ECN broker should keep you updated regularly on your trading account. A reliable broker will provide ongoing updates, explain anything you’re unsure about, and assist you with any problems you encounter.

– Also, check the reputation of the broker. Read reviews from other traders to see if they’re happy with the broker’s services.

Conclusion

In conclusion, ECN brokers let you trade forex with big institutions like banks and hedge funds. This means you get the best spreads without extra charges or delays. Remember, not all brokerage companies are regulated by financial authorities. Some unregulated brokers might claim to be ECN brokers, but they could be something else, like dealing desk brokers. So, make sure your broker is regulated as an ECN broker.

FAQs

How to Use ECN in Forex Trading?

ECNs are like computer programs that link regular forex traders with big brokerages, all day and night. When you log in to the ECN platform, you can see the best prices to buy and sell from different traders. ECNs automatically match and carry out orders.

What are ECN fees?

The ECN fee is a charge for making trades on the ECN. It includes fees from the broker and the ECN. The fee is a set amount based on how much you trade.

How are ECN trading fees calculated?

ECN fees are charged for each trade, usually just a tiny fraction of a cent. ECNs ask for a fee for bringing together buyers and sellers who are trading on their platform.

How can I start an ECN trading account?

Starting an ECN trading account is easy. Just sign up on one of the many ECN trading websites that suit you best. GO Markets, Exness, and XM are some of the most used ones.

What’s the difference between STP and ECN?

ECNs help traders connect with various parties, like brokers or other traders, to make trades happen. STP brokers, on the other hand, let traders deal directly with certain liquidity providers, cutting out the middleman.

Which ECN broker is the best?

The best ECN broker depends on what you need. It’s a good idea to try a demo account to see if the broker meets your requirements. According to us, Pepperstone is the best ECN broker in 2024. They offer seamless and free deposits and withdrawals, low trading and non-trading fees with Fusion Markets, and fast and easy account opening with great customer service.

Which is better: ECN or STP?

In reality, there’s often little difference between ECN and STP execution policies. These terms can be vague and used more for marketing. It’s better to understand a broker’s actual execution policy rather than the label it uses, and then compare between brokers.

How do ECN brokers make money?

ECN brokers make money by charging fixed commissions to customers on each trade.