Best ECN Forex brokers

What is ECN?

What does it stand for? in english, ECN stands for “Electronic Communications Network”. It is a technology used by brokers to connect their clients directly with the liquidity providers of the Forex market. It is is a fast expanding way for Forex traders to do their trades.

What are ECN brokers?

ECN brokers provide their clients a direct access to the interbank market, trades are sent anonymously into a network where it is automatically matched to orders from liquidity providers as major banks, prime brokers, financial institutions. At the opposite, “market makers” brokers (Non-ECN) take the other side of the trade themselves, creating a conflict of interest with their clients. ECN brokers are also referred to “No Dealing Desk” (NDD) brokers.

Why use an ECN broker?

Advantages:

• Tight spreads
• Deep liquidity
• Price transparency, market driven spreads, no requotes, no conflict of interest: broker does not trade against you
• Fastest order execution, low latency, low slippage
• Trades are placed anonymously
• Ability for scalping, news trading and hedging possible
• No disconnects during news events

Disadvantages:

• Higher minimum deposit to start trading
• Higher minimum trade sizes
• Platforms unfriendly for beginners
• Smaller leverages
• No guarantees for stop loss execution

ECN brokers charge commissions but total fees for a trade tend to be smaller than it is with a standard Forex account.