HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
Vantage information and reviews
Vantage
85%
MultiBank Group information and reviews
MultiBank Group
84%

ECN accounts: what are the advantages?


To start trading on Forex, a trader needs to open a trading account, which is now not a problem at all, as numerous forex brokers offer various accounts: such as demo accounts, standard, STO, NDD, and ECN. All of them are more or less similar, and differ from each other only in the size of the spread, commissions, pledge for the transaction, and methods of execution. Recently, ECN accounts have been gaining special popularity. And now we’ll try to figure out what attracts traders in these accounts, how they work and what their advantage is.

ECN under the microscope


So let's go. ECN accounts appeared almost 20 years ago, but then they did not take root in the market. The reasons for the failure were a small number of small speculators in the market who could not afford to enter this system, the actual absence of brokers who would do this, and the lack of trading platforms.

What is the essence of trading on such accounts? The main and undeniable advantage is the trade bypassing intermediaries, including brokers. Market participants themselves choose the liquidity providers with the best prices. Of course, the broker is not completely set aside, but now the broker acts only as the owner of the trading platform. A Forex brokerage company receives a small percentage for providing access, and this is where the payment to the broker ends.

ECN account


Here is an example ECN account operation scheme. The trader sends a trading request, which immediately falls into the “glass of prices”. In other words, the system directly connects trading participants. For example, you need the British pound. You set the purchase price and fill out an application. Suppose that four agents in the market sell the lot for this asset. Each of them has its own price, and the system connects you to the seller whose price is closest to your specified level.

Benefits of an ECN Account


Why ECN systems attract forex traders? Firstly, instant providing the trader with all the necessary data. Secondly, we highlight trading transparency, as transactions go directly to the market, so that no third parties, such as forex brokers, can manipulate quotes. Thirdly, all trading orders that enter the system are immediately displayed in it and become known to the participating subscribers. There are no limits on the choice of counterparty. Traders have the right to choose them for themselves, regardless of the level of quotes. In addition, the system has high volatility. Thanks to the floating spread, the price can jump tens of points in minutes. Classic accounts cannot boast of such volatility.

We also single out the almost instantaneous order execution speed. And finally, it's reliability. The fact that the largest world banks and corporations are in the system makes it a reliable way to trade.

Such types of accounts are suitable primarily for scalpers, pipers, and those traders who trade on the news for accuracy of execution and the minimum commission. Nevertheless, not only “pips” traders will be interested in these accounts. Anyone can trade ECN without restrictions. Agree, the technology of complete non-interference by the broker is an indisputable advantage. True, one of the serious disadvantages of an ECN account is a rather high minimum deposit. But this is not a problem now, as more and more forex brokers lower the threshold for access to such accounts.

For example, take a conventional broker, which relatively recently lowered the minimum deposit for opening an ECN account to $200. In addition, the broker increased his leverage to 1:200, which greatly expanded the trading opportunities of its clients.

By the way, if you are not confident enough in your knowledge and trading experience, you can always try your skills on an ECN demo account. This account is absolutely no different from the standard demo, except that there is an ECN system.

So, let's summarize what are the advantages of ECN accounts over standard ones. The first is security. Since there is no intermediary in the transaction, you are 100% sure that no one will juggle quotes. In addition, you can enter the market at a better price, since the system itself will look for a counterparty. Each trader knows that with any transaction, the spread “eats” part of the profit. In this system, these losses are minimal. It is worth noting the high speed of order execution, which is noted by scalpers and pips traders, for whom every second of trading is worth its weight in gold.

Sooner or later, every trader comes to the ECN account. This is a different level of trading, and it requires great knowledge and experience. Nevertheless, it may also be interesting for a beginner to try something new, and to understand whether such a system is suitable for him in the future.


Advantages of ECN Accounts

Disadvantages of ECN Accounts

A trader who decides to work with this type of account should pay particular attention to the question of choosing a broker, since not all companies that position themselves as ECN brokers are actually such. How to identify a real ECN broker? Experienced traders are advised to pay attention to the following:

Forex trading today offers traders a lot of opportunities for comfortable and profitable trading. Each member of the financial market can independently choose a trading method depending on their preferences and goals. ECN accounts are accounts for traders who have already reached a high level of financial development.

Author: Kate Solano, Forex-Ratings.com

RELATED

Chainlink: Is It on Track for a Bull Rally?

If you have recently watched the crypto charts, you can see the growing popularity of many coins, including Chainlink (LINK). And while so many assets are on the bull run...

How to Predict Price Movements in the Forex Market in 2022

Many beginning traders do not understand why forex forecasts are necessary. However, analysis of financial markets has been and remains the main guarantee of success of a forex trader. So, how to make an accurate forecast?

Litecoin records 4% gains

On February 26, only Litecoin and Ethereum amongst the 10 most valuable cryptocurrencies in the global market managed to record daily gains...

Copy trading: tap into the knowledge of top-performing traders and earn money

To be a successful Forex trader, you need to have extensive experience and knowledge of financial markets. But what if you are a novice trader who is just getting started?

All About Forex Day Trading

Day trading refers to the speculation on buying and selling a financial instrument within a single trading day and it is actually a very popular short-term trading strategy...

NFP trading: understanding the effects of the Nonfarm Payroll

Professional traders often consider economic announcements as a reliable indicator of coming price action, and one of the biggest reports that capture traders' attention is the NFP...

Pros and Cons of Forex Crypto Trading

Bitcoin and some other cryptocurrencies regularly provide the opportunity to multiply a forex trader's capital. With digital currencies the...

What Factors Influence Tezos (XTZ) Token Price?

Cryptocurrency continues to gain more and more attention with time. The systemic worries that accompany traditional assets, including stock fiat currencies...

Ultimate guide to Dogecoin trading

Dogecoin is a highly popular "meme coin" that has even attracted the likes of Elon Musk to become a fan. Dogecoin is a cryptocurrency that was created in 2013 as a joke...

How to Trade Forex on News Releases

A great advantage of trading currencies is that the forex market is open 24 hours a day, five days a week. Markets move because of news, so economic data...

Trading Ethereum CFDs: What You Should Know

Ethereum is currently the second-largest digital currency by market capitalisation after Bitcoin. There are several things to keep in mind before diving...

Trading Bitcoin and Ethereum on Forex

The sharp rise in the price of Bitcoin has led many Forex traders to try to trade in Bitcoin and other altcoins. Indeed, if there is a financial asset that demonstrates...

What is Leverage Trading in Crypto?

Leverage trading, also known as margin trading, allows you to significantly magnify your profits in the markets. However, bear in mind that leverage...

NFP's Effect on Gold Prices

While the relationship between gold and NFP is not clearly defined, in the short term, it could serve as an indicator and a trading opportunity. Being one of the most...

How to Trade Stocks Online: A 5-step Process to Get You Started

Online stock trading can be confusing to the uninitiated, but newcomers looking to start their investment journey needn’t be put off. Here’s a 5-step guide to get you started...

What is Decentralized Finance, or DeFi?

Decentralized finance, or DeFi, is similar to but not identical to Bitcoin (BTC). The term "DeFi" refers to financial systems enabled by decentralized blockchain technology. DeFi is mostly linked to the Ethereum (ETH) blockchain...

Elevate Your Trading Game with ModMount's Index CFDs

If you're ready to showcase your financial acumen in optimal trading conditions, ModMount invites you to explore the dynamic world of Index Contracts for Difference (CFDs)...

What Is Bitcoin and what changes its price ?

Ever since it came into being, Bitcoin has taken the world by storm. From being an upstart, it has clawed its way into becoming a financial powerhouse...

Investment Time Horizon: Definition And Its Role In Investing

Beginning investors who come to the stock market are inevitably confronted with terminology that is new to them. An accurate understanding of this vocabulary makes it possible...

What Is A Crypto Faucet And How Does It Work?

Bitcoin, Ethereum, and other cryptocurrencies are the talk of finance once again, and everyone wants to own a piece of the action. But as prices of Bitcoin...

XM information and reviews
XM
82%
FP Markets information and reviews
FP Markets
81%
FXTM information and reviews
FXTM
80%
AMarkets information and reviews
AMarkets
79%
Octa information and reviews
Octa
79%
BlackBull information and reviews
BlackBull
78%

© 2006-2024 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.