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 ECN Forex Brokers

 

Defining an ECN Forex Broker

A Forex broker that uses the ECN network (Electronic Communications Network) to offer its clients direct access to orders of large participants in the global currency market.

What is Actually an ECN Forex Broker?

ECN stands for Electronic Communication Network. ECN Brokers provide traders direct access to the Foreign Exchange market. An ECN broker does not have a Dealing Desk and all the orders of its customers are passed directly to the liquidity providers (major commercial banks).

Linking with the Liquidity Providers

ECN brokers get connected with large banks (tier-1 liquidity providers) using a standard setup called Financial Information Exchange Protocol (FIX Protocol).

Two Types of ECN Brokers

There are two general categories of ECN Brokers:

(1) Retail ECN Brokers

(2) Institutional ECN brokers

Institutional ECN brokers offer better trading terms than the Retail ECN Brokers. Institutional clients include banks, hedge funds, large importers / exporters etc.

Trading Cost when trading with ECN Brokers

As ECN brokers have access to price quotations from different liquidity providers they can offer tighter spreads than the average spreads of the retail market.

ECN brokers make profits from:

(1) Either from the spread between ask and bid (usually 0.3 to 0.5 pips)

(2) Either they charge trading commissions (usually about $10 / lot)

Some ECN brokers can even offer their clients zero spreads. In exchange, they charge higher trading commissions (usually $13-18 / lot).

ECN Brokers and Deposit Requirements

ECN Forex accounts require larger deposits than STP or Dealing Desk accounts. Usually, the minimum deposit for opening an ECN account is $1,000 but some ECN brokers require $5,000 or even $100,000 as a minimum account.

Why Trading with an ECN Broker?

The great advantage when trading with an ECN Forex broker is that you don’t trade against your broker as in the case of a Dealing-Desk broker. Furthermore, the ECN spreads offered are narrower than in the case of other online brokers. Another advantage usually offered by ECN brokers is anonymous trading.

Compare the Accounts of ECN Forex Brokers

In the following table, you may compare the trading terms of some popular ECN Forex Brokers. Note that only ForexBroker Inc. welcomes US traders.

ECN BROKER

REGULATION

PLATFORMS

MINIMUM DEPOSIT

OPEN ACCOUNT

 

» FXCC

FCA UK, CySEC, MiFID

METATRADER-4, SIRIX WEBTRADER, ZULUTRADE, PAMM

$500

-ECN accounts can be opened in USD, EUR, GBP

-Leverage up to 1:200

 

 

► FXCC ECN Account

 

» DUKASCOPY EUROPE

FINMA Swiss, MiFID

JFOREX, WEBTRADER, JAVA TRADER

$100

-ECN accounts can be opened in USD, CHF, EUR, GBP, JPY, CAD, AUD, SGD, PLN and HKD.

-Leverage up to 1:200

 

► Dukascopy ECN Account

 

» IRONFX

FCA UK, CySEC, MiFID

METATRADER-4, METATRADER-5, SIRIX WEBTRADER, PAMM

$500

-STP/ECN account currencies include USD, EUR, GBP, AUD, JPY, CHF, PLN, RUB and HUF

-Leverage up to 1:200

 

► IronFx ECN Account

 

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What is an ECN Forex Broker?

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