ECN Brokers

ECN brokers are forex brokers that use electronic communication network (ECN) are one of the most popular brokerages in the forex world.  Electronic Communications Network is a technology that connects retail forex market participants with liquidity providers.  Although ECN accounts require higher minimum deposits compared to standard forex accounts, as an advantage they offer lower spreads (tigher bid/ask) thanks to consolidation of price quotations from several market participants.

Here is the list of the best ECN brokers:

  • Pepperstone ⇒ #1 Best ECN Broker with ultra low spreads
  • IC Markets  ⇒ one of the first ECN brokers
  • Admiral Markets
  • FXTM

In our comparison, we tested top rated ECN brokers, which offer their services across the world. We have written down our results and experiences in extensive test reports.

Because of the excellent overall offer, Pepperstone is the clear winner of our ECN brokers comparison!

What is an ECN Broker

ECN brokers are non-dealing desk forex brokers. This technology provides straight through processing execution that enables execution in a direct connection between the parties.

ECN brokers use “Electronic Communication Network” that allows forex traders to connect with other forex traders with the purpose to close the deal.  ECN brokers  match the forex trades of their clients together, they don’t trade against them like some unscrupulous forex market maker brokers might do. Once a forex trade is being placed, your forex order is being routed via the Electronic Communication Network to the endless forex market (ECN passes the orders to liquidity providers) where it is awaiting the counter part. Each forex trade is being facilitated within seconds. You are being charged a fixed commision. Due to a high liquidity, you can expect very tight spreads.

Image shows how trading with ECN forex broker works

Benefits of the Electronic Communications Network

  • lower forex trading costs = tight spreads
  • fixed commisions per each round Lot (approx. $1-$10 per Lot)

Disadvantages of the Electronic Communications Network

  • generally we recommend ECN forex brokers for higher volume traders
  • ECN forex brokers can be a little bit more expensive per transaction than forex Market Maker
  • higher deposits required (usually over $200)
  • not suitable for a complete forex trading beginners who know nothing about trading and trade micro lots
Dealing vs no-dealing desk

Things to consider before trading with ECN Forex brokers

 

1. ECN forex brokers require higher minimum deposit amount

Registration with an ECN broker might be a problem for newcomers on low budget, because the requirements are usually much higher than with forex Market Makers.  Usually the required first minimum deposit with ECN Broker is simply too high for a newbie. Beginners rarely can deposit more than $1000 USD as a first deposit. At the same time, however, we must mention here that Forex trading only makes sense if you have several hundreds and more on your trading account balance.

If we then assume a minimum transaction size of $20 , we already get to a amount of $400, that you would have to deposit onto your trading account in order to be able to participate in trading at all.

2. Local depositing / withdrawal methods

While most brokers now offer online payment e-wallets such as Paypal, Skrill or Neteller, Webmoney,  PerfectMoney  there are still a few providers that do without them. They must then make a deposit by bank transfer or credit card. As a result, the funds are only received by the broker after a few working days and are only credited online. Immediate trading then does not succeed.

A similar principle applies to disbursements. If the ECN broker allows withdrawals via online payment services, the money is faster with the recipient. However, this is rarely the case for security reasons.

3. ECN forex brokers offer high quality forex training

Especially for forex beginners and newcomers in forex trading it is very important to go to the forex currency market with a certain basic knowledge. Only in this way is it possible to make long-term gains from trading currencies. ECN brokers offer a wide range of high quality online forex training opportunities. These include free eBooks about forex , trading webinars, and seminars. Introductory videos and FAQ sections are also welcome. The texts there should be in German and easy to understand. For beginners, the basic courses are important and interesting. With good brokers, however, professional traders and traders can also learn something.

Part of the training opportunities is also a demo account. Not many ECN brokers provide one free of charge. That’s why those who have a free offer in petto are particularly attractive. Especially beginners should in any case take advantage of the opportunity to gain risk-free experience on the market with a demo account. But demo accounts are also a really necessary even for experienced forex traders and forex professionals. They can test new forex tactics and strategies directly on the real market and do not run the risk of losing part of their capital. However, many forex ECN brokers offer demo accounts usually only  for a short period of time, such as 14 days. This period should be used as effectively as possible.

The advantages of trading forex with ECN

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