Here is the list of the world’s best true ECN forex brokers:
- Pepperstone: very low spreads, lightning fast, MT4/cTrader, great support team
- XM.COM: very fast trade execution, MT4/MT5, low spreads, multi-language support
- IC Markets
- Admiral Markets
In our comparison, we tested the best ECN forex 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 winner of our ECN broker comparison.
What is ECN Broker?
ECN Brokers use “Electronic Communication Network” that allows forex traders to connect with each other with the purpose to close the deal. This type of brokerages only match the trades of clients together, they don’t trade against them like some shady market makers do sometimes. Once a trade is being placed, your order is routed via the Electronic Communication Network to the endless currency market where it is awaiting the counter part. The trade is being facilitated within seconds. You are being charged a fixed commision. Due to a high liquidity, you can expect very tight spreads also.
The benefits of trading with ECN brokers
- lower trading costs = tight spreads
- fixed commisions per each round Lot (approx. $1-$10)
- generally we recommend ECN for higher volume traders
- little bit more expensive per transaction than Market Maker
- higher deposits required (usually $200+)
- not for complete beginners who know nothing about trading
Things to consider before signing up with an ECN broker
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 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.
Well the rule of a thumb says,
“No more than 5% – 7%” of the total capital should be invested in one single position.“
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.
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.
Especially for beginners and newcomers 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 and foreign exchange. The broker should therefore offer a wide range of training opportunities. These include free eBooks, 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 traders and professionals. They can test new tactics and strategies directly on the real market and do not run the risk of losing part of their capital. However, many forex ECN companies offer demo accounts usually only for a short period of time, such as 14 days. This period should be used as effectively as possible.