How To Start Forex Trading through ECN Brokers?

 


Introduction

In the forex market, there are three types of brokers: 1. Market Makers 2. ECN brokers and 3. STP brokers. Each of the brokers has its advantages and disadvantages. But if you focus on the comparative advantages of these brokers, ECN will stand first. True ECN brokers ensure the best trading condition for their clients. Market Makers are dealing desk brokers who take the opposite side of the traders. That means they win when the client loses. But ECN broker has no limitation like this. ECN brokers charge a commission on the winning of the clients. Hence, they focus on how the clients can win more trades. Another advantage of ECN broker which Market Makers cannot provide is that ECN broker offers fast execution of trades. As a result, the client can trade at a favorable price. Considering all these facts, it can certainly be said that ECN is one of the best brokers in the forex market. This article, it will be discussed how ECN brokers work and what makes an ECN broker the best ECN broker. Here, it will also be discussed how traders can avoid scam brokers and find the true ECN broker.

What is an ECN broker?

ECN broker is a kind of no dealing desk forex broker which works via Electronic Communications Network (ECN). It is a computerized trading system that creates trading conditions for buyers and sellers.

How ECN brokers work?

ECN brokers work in a digital system. It amalgamates different participants in the network and automatically matches their buy and sale orders in the forex market.  Besides, ECN brokers provide ongoing buying and selling price quotes. As a result, the participants come to know the quotes of other participants and trade-in tighter bid/ask spreads. ECN brokers link banks, market traders, individual traders, liquidity providers in a single network so that they can directly trade between themselves.

Advantages of ECN brokers

ECN brokers do not trade against their clients like Market Makers. They just match the clients’ orders with the orders of other participants. The broker does not depend on the clients’ win or lose to make money rather it charges a certain amount of commission from the client. In fact, it is beneficial for an ECN broker if the client wins.

True ECN brokers provide transparent pricing to the customers. Market prices are not manipulated in the ECN network. ECN brokers show the market prices to the clients, unlike Market Makers who set their own bid/ask prices. The clients have direct access to the bid/ask prices in the network.

A client can anonymously trade in forex through ECN brokers.

A true ECN broker offers a lower bid/ask price. ECN brokers match orders of different participants. The participants can know their desirable bid/ask price. Hence they can trade in tighter bid/ask spreads.

In the ECN network, the traders can trade instantly without any delay. Besides, ECN brokers also prevent re-quotes. Re-quotes occur when the trade is executed slowly. As ECN brokers ensure fast execution, re-quotes do not occur.

How to Find the Best ECN Broker and Avoid Scam Brokers

To find the best ECN broker, one needs to consider few things. At first, the trader should check if it is a regulated and licensed ECN broker or not. If he selects an unregulated broker, there is a possibility that it is not an ECN broker, rather a desk dealing scam broker camouflaged as an ECN broker. A true ECN broker is always a regulated and licensed broker.

The best ECN broker will ensure the safety of clients’ deposits. If the ECN broker does not provide deposit assurance, there is a chance that it is a scam broker. Hence, the trader should find an ECN broker that gives safety of the deposit.

ECN broker links the participants directly to the network. It shows the accurate bid/ask prices of the orders. The clients can trade directly without any middlemen. As a result, the best ECN broker provides the tightest spreads. Furthermore, a true ECN broker will definitely offer spreads.

The best ECN broker will provide dedicated 24/7 customer support in multiple languages. If a trader has questions regarding the ECN broker, the customer service should reply to all his queries.

The best ECN broker will deal with maximum assets. If an ECN broker offers assets like the maximum forex currency pairs, indices, commodities, etc then it can be considered as the best ECN broker.

A true ECN broker will have a reputation in the market. If a trader finds out that the ECN broker does not have much reputation in the market, he should consider that it can be a scam broker. The best ECN broker will have the best reputation in the market.

Conclusion

ECN brokers are highly demandable brokers in the forex market. They directly create a bridge between traders and liquidity providers. As a result, the traders can trade at the best possible price. The spread also remains very tighter. The trading condition is also very swift and transparent. There is no interference of the broker with the trading of the clients. If you want to trade in forex and win trades, you can select the best ECN broker by following the guidelines that are provided in this article.


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