ECN is short for an Electronic Communications Network. ECN forex brokers does not offer the functionality of a dealing desk but instead creates a market place where in several market makers, financial institutions as well as traders can easily engage in contending rates for bids and offers while having their deals fullfilled by a number of liquidity service providers within an anonymous dealing environment.
Your positions and trades tend to be excecuted on your behalf by the ECN forex broker, thus providing forex traders with absolute privacy. Click here for a detailed review of what is an ECN.
There are numerous ECN forex brokers that offer their services presently with the help of Currenex, which is probably the most frequently used ECN platform. Currenex is usually utilised by financial institutions as well as investment banking companies and out of bounds for several retail traders, although in the present day because the need for tight spreads in addition to transparency has enhanced substantially numerous commonly recognised retail currency trading platforms including Metatrader happen to be modified to accommodate ECN forex brokerages.
Nowadays much more than ever the actual association amongst retail traders as well as investment banks is definitely decreasing.
Utilizing an ECN forex broker to trade with, provides many different significant benefits, quite possibly the most visible being the tight spreads along with deep liquidity. Narrow spreads make sure that day traders in addition to scalpers could make the most of small price changes during an intraday time period.
Deep liquidity implies that significant volumes may be easily bought and sold without any impact on price. This can be especially crucial in an unstable market scenarios and offers substantial benefits for investors making use of automated currency trading systems.
The two of these components combined imply that it’s possible to take advantage of a lot more trading opportunities, more opportunity implies more potential profits.
Advantages of choosing an ECN Forex broker
In the list below we outline the advantages that come with, when trading with an ECN forex broker.
ECN Forex Broker – An Intermediary
ECN forex brokers act as an intermediary for your trades. When trade on an ECN network your privacy is perfectly guaranteed as well as your account not being identified or tracked to you. This will likely assist you in safeguarding your own trading strategy since you deal under the ECN broker.
ECN Forex brokers places trades on your behalf
That you are autonomous to create your own trade limitations and spreads when using an ECN forex broker is an advatange in itself. The ECN forex broker tends to match your bid with the various other contributors and by means of this method you will gain some additional pips. There aren’t any constraints or restrictions concerning placing or canceling your orders. In this manner traders can trade as their own market maker.
Trade news and events with an ECN forex broker
ECN forex brokers enables forex traders to trade in the course of breaking news and events, which is an added advantage. Trading with an ECN forex broker always remains continual and by means of this you can even gain the benefit of price volatility.
ECN Forex brokers are facilitators
It is very important to note that you are not trading with an ECN forex broker, but instead you are placing your orders by making use of the ECN forex broker that you trade with.. The ECN forex broker is merely matching your order with other market participants within the ECN network in a timely manner. By making use of an ECN forex broker, traders can easily assess their orders besides checking the best price level of a currency pair provided in the market. This helps to increase the execution of orders.
ECN Forex brokers are ideal for scalpers
When trading with a ECN forex broker the prices constantly change and may occur too rapidly. Swift adjustments increases the price volatility. In cases like this forex scalpers as well as the short term day traders can quickly claim significant profits. ECN forex brokers are ideal for scalpers.
Popular ECN Forex Brokers to trade with
LMAX Exchange: Operating as an MTF, Lmax Exchange is regulated by the FCA in the UK. Known to offer one of the most competitive spreads in the forex industry, LMAX Exchange offers trading via API, Web interface and MT4 trading platforms. With no dealing desk, LMAX Exchange charges only commissions.
Naturally making use of an ECN forex broker will not definitely offer much benefits if a trading strategy or plan is not employed. Using a forex trading strategy that can take into account your risk profile, in addition to your investments is critical before you decide to begin trading.
After formulating your trading strategy forex traders should consider using a couple of forex trading platform demos to determine which trading platform most precisely matches your own trading strategy. Needless to say it is necessary that you choose to pick a forex trading platform available from a good ECN forex broker. It could possibly be challenging to determine if the forex broker in question is actually an ECN service provider, even so generally speaking ECN forex brokers will charge a fee on your dealings instead of quoting you an increased spread.