ECN stands for Electronic Communication Network and it is currently a very popular instrument in forex trading that can be used to directly connect traders with financial companies. Thus an ECN forex broker is a financial professional that uses ECNs to give traders not only direct access to participants in this market but also tighter spreads, which is one of the things that any trader would appreciate.
In This Guide
ECN forex brokers are very popular these days and are even said to be leading the way into the future of trading. Learn about this new kind of trading and find out if it is the right move for you. The table below shows some of the top ECN brokers in the forex industry.
ASIC, CBI, BVI, FSCA, IIROC, FFAJ, JFSA, ADGM FRSA
up to 40% bonus
$10 000 demo
ECN trading is a relatively new and highly innovative method of forex trading that is considered by many experts to be the future in trading. In order to fully understand how ECNs work, one might need to have some extensive technical knowledge as the system is quite sophisticated. But what’s more important to know is that ECN forex trading comes with a number of advantages that you simply must consider if you want to have the best possible forex trading experience.
Since all transactions are done automatically through the network, the ECN forex brokers will cause no interference at all to your transaction. All you have to deal with and focus on is the actual conditions in forex market. The prices will be accurate and unaffected by external factors, such as the strategies that some traders use or the fluctuations in current positions in the market.
With the use of live streaming technology, ECN lets you trade instantly. The moment you decide on any trade, it will immediately be validated and executed without any delays or any need for further confirmation. This advantage allows you to experience the best prices based on the trade decisions that you make. Also, revised quotes do not exist in ECN trading because of the instantaneous nature of the trading.
No matter where you are in the world, you can make any trade on international liquidity. With ECN, any market is easy to access at any time, and you can get connected directly to some of the top financial entities from any country.
The high-tech nature of the network allows any trader to connect their trading models and their risk management systems right to the live feed that delivers the actual market information. Again, this eliminates any delay or interference and allows you to take advantage of the best prices of the forex pair you are trading at any time.
Compared to general forex trading where fixed spreads are often used, ECN trading only uses variable spreads, which is highly advantageous to traders because they get the chance to dive it at a specific time that the prices are most profitable to buy or sell.
Just like in any financial venture, you should be very careful in choosing who to partner with in the world of forex trading. In looking for a reliable ECN forex broker, here are some of the most important features that you should look for in potential candidates.
You certainly don’t want to invest your funds with a company that might suddenly disappear with all your hard earned cash. To keep this from happening, you should only choose a fully regulated broker. In other words, the broker should be regulated by reputable government authorities in trading, like FINMA, ASIC, CySEC or FCA, to name a few.
From the start, check whether the broker accepts the funding methods that you wish to use. While you’re at it, you should also check the withdrawal process and whether or not there are fees involved with the transfer of funds.
The profits that you earn with each trade will be greatly affected by the trading cost charged by your broker. Make some quick computations to find out if the cost of trading is feasible. Also, costs vary across different types of accounts even with the same broker. Therefore, you have to be careful that the costs you are considering are indeed for the type of account you plan to open.
With online trading, the kind of technology used plays a very significant role in the success of the overall trading experience. You want to be able to use a trading platform that has a variety of powerful features but at the same time is also not too complicated to use for managing your own trades. It would be wise to check out a number of different brokers to see for yourself the technical features of their platforms before you make a final decision.
Many ECN forex brokers offer creative trading promotions in order to attract more traders to sign up. Welcome bonuses are not very common in this particular type of trading but rebates are very popular. Check out the rebates plans available with the different brokers out there.
If you want to try your hand at ECN trading, you should only work with the best ECN forex brokers so that you can really get a feel of the experience.
When it comes to ECN trading, Exness is one of the most recommended brokers in the world. With both spread and commission among the lowest among all ECN forex brokers, it is easy to see why many traders, especially beginners and casual investors, prefer this company. Besides the affordable fees and the excellent reputation, Exness is also known to have fewer gaps and slippages and they are also well-known for having the fastest trade execution speeds.
Exness is based in Cyprus but they also have offices in England, Singapore and Malaysia. They are quite versatile in terms of the trading platform, offering both MT4 and MT5, and also have excellent web and mobile platforms. Like most ECN forex brokers, Exness does not have a welcome bonus but they do stand out from the rest because of their minimum deposit of only $1, which is definitely the lowest minimum deposit. Exness is regulated by tier-1 regulators CySEC and FCA, making them a highly reliable broker to work with.
Established in 2009, this broker is hands down the best choice for ECN beginners. To begin with, they are regulated by multiple top-tier regulators from around the world, including ASIC, CySEC, FCA, IFSC and DFSA. This means that they are a very reliable broker and with more than a decade in the business, they are also trusted by millions of brokers from different countries. XM has offices in Sydney, London, Dubai, Belize and Limassol.
It is not hard at all to open an account with XM. Their minimum deposit requirement is only $5 and they have very low spreads. In addition, they offer a leverage of up to 1:888 which can give you a substantial profit with each trade if you play your cards right. XM currently does not have a mobile trading platform but they do have excellent features on both MT4 and MT5, and you can also access your account through the web.
FP Markets or more officially known as First Prudential Markets Pty Ltd is regulated by ASIC and CySEC, two of the strictest forex regulatory bodies in the world. This means that FP Markets is indeed a broker that you can trust with ECN trading. This broker is highly recommended for beginning ECN traders because of their low fees and multiple trading platforms that you can choose from. They offer more than 10,000 trading instruments, including many forex currency pairs.
The minimum deposit at FP markets is $100 which is quite high compared to the change that some other brokers require but it is still not that high when you really consider it. Since they were established in 2005, FP Markets has received multiple awards for Most Satisfied Traders, Best Trade Execution, Best Education Material and Best Customer Service.
Some of the best features of Pepperstone as an ECN forex broker are their highly competitive spreads, rapid execution and stellar customer service. Over the years, they have received multiple awards for their excellent performance in these areas. Pepperstone is perfect for someone who is just starting to venture into forex trading. Their trading platform includes several advanced features that will be appreciated by a seasoned trader but it is also very easy to navigate even for a beginner.
ASIC of Australia and FCA of the UK are just two of the many regulatory bodies that regulate Pepperstone, making it one of the most trustworthy brokers in the world. Their spreads are very competitive and the commissions are also quite good. In addition, Pepperstone does not have inactivity fees. The only downside is that the minimum deposit requirement is higher than some of the other ECN forex brokers at 200 GBP for UK and EU traders. Clients from other countries can start trading with only 200 AUD as the minimum deposit.
Another Australian broker, Vantage FX was established in 2009 but only switched to their current name in 2015. It ranks exceptionally well in the areas of customer service, research, account opening and fund transfers. Vantage charges low fees and presents no hassles at all when it comes to opening an account and transferring funds. They do not charge fees for inactivity or for deposit or withdrawal of funds. They also accept bank transfers, credit and debit cards and many kinds of online wallets for fund transfers.
When opening an account with Vantage FX, it will only take you about 5 minutes and you can already start buying and selling forex. You do need to deposit at least $200 before being able to trade. Trading with Vantage FX is versatile as they have multiple trading platforms that you can use, including the popular MetaTrader 4 and 5, as well as their mobile apps. There are no fees for online fund transfers except if your transfer is coming from an overseas bank, in which case you might be charged a reasonable fee.
As ECN trading continues to become more popular, some brokers are taking advantage of this by claiming to be ECN brokers when they really are not. If you are interested in ECN trading, you have to look for only the true ECN brokers, which are the ones that really have no dealing desk and have proper regulation. If you make your choice wisely, you will have the potential of having a really successful experience in forex trading.
A lot of people are easily enticed to get into ECN trading because it does really sound good right from the start. However, there are a lot of things that you should certainly want to know about before you dive in. Here are some of the most commonly asked questions about this modern type of trading.
Yes, there are demo accounts in ECN trading, just like in most other kinds of trading. Take advantage of these demo accounts to test spreads, determine the risk of positions and even learn the ropes of the system.
The actual fees charged by ECN forex brokers may vary but some of the fees you might encounter are trading commissions, withdrawal fees, inactive fees and special services fees.
Wire transfers are accepted by all ECN forex brokers and most also accept transfers through credit or debit cards. Many ECN forex brokers now also accept various forms of online fund transfer systems like PayPal, Skrill, Neteller, and so on.