Nowadays there are more and more companies claiming to be ECN Forex Brokers. Also, providing services through Electronic Communication network can be known as Agency Model or A-Book. Sometimes ECN as emphasized and is referred to us True ECN.
So what is ECN and who are ECN Forex Brokers? ECN stands for Electronic Communication Network. This tell us that when your place an order, this order goes directly to the market without passing on to the broker, neither in terms of intervention (Dealing Desk), nor as processing (STP). In many cases, ECN engine also allows Exchange Execution. This means that you can directly buy and sell within the network of your broker.
Such type of trading is appreciated for expecting a trader to gain profits and being transparent. ECN is quite resourceful for the broker, this is why there are many STP Brokers presenting them as ECN FX brokers. Only real and true ECN FX Brokers are listed on Forex Bonus Lab.
ECN Forex Brokers Showcase
There are much less ECN FX Brokers, as it requires quite some investment into a proprietary pricing engine. Surprising, some broker go even further and develop their own trading platform connected to the pricing engine. Other can simply offer better support and payment systems, while providing a white label of a platform developed by another broker.
Q3 2016 Best ECN Forex Broker – Admiral Markets
In this year, the best ECN Forex broker is Admiral Markets. When compared to our previous winner, this broker offers increased up to 1:500 leverage. Furthermore, its spread on the most liquid currencies are no worse than at other best Forex brokers. Since Admiral Markets has ASiC and EFTSA registration, it is most probably offering its services in your country, if you are not from the USA.
Leverage: 1:500 Licences: FCA, ASiC, EFSA
Min. Deposit: 200 USD Bonus: N/A
Spreads: from 0 pips US Clients: No
Best ECN Forex Brokers Comparison
Below we are comparing the best ECN FX Brokers, so you easily see what broker suits you best. Generally, when it comes to selecting an ECN forex broker, you are choosing between platforms, licenses and supported languages. Pricing comes handy too, but as it is constantly changing, Forex Bonus Lab has disregarded it in the comparison chart of the best ECN FX brokers.
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Are True ECN Forex Brokers better?
This is a hard question to answer. All depends on what you are looking to find at your perfect forex brokerage. You should also consider your trading strategy when selecting a type of an execution. If you are a scalper, you shouldn’t go for less than STP or ECN. For positional trading, you should take into account mainly the swaps, commissions and spreads don’t matter much. But as you are here for the ECN FX brokers, let’s check the truth about ECN below.
Is ECN really cheaper?
ECN forex brokers usually charge low spreads, frequently below a pip on majors. However, you will be charged a commission between 5 and 15 USD per one yard (100,000 USD) of transacted funds. So in total you are paying less than 3 pips to complete a trade. This is not always the best offer, compared to STP.
Are ECN fx brokers transparent?
Yes, they are. ECN FX brokers are sending your orders directly to the market and they only benefit from a part of the commission you pay. These brokers expect traders to gain when trading forex. No conflict of interests.
Is ECN Fx broker a more secured one?
We would say yes. ECN brokers don’t “gamble” with clients deposits, hence you don’t expect them to lose on the client’s trades and be short of money. Still, you have to consider the recent times. On 16th of January, a black thursday for ECN FX brokers. Due to interventions to CHF, FXCM lost over 220 million USD, while the whole retail industry suffered about a billion in losses.
To sum up, the philosophy behind the Agency Model needs support and you can show it by opening an account with a true ECN forex broker. If you are looking for good trading experience, and yet you want to enjoy some forex trading bonus – then ECN is probably not for you.
Check More FX ECN Broker Reviews
If you are looking for the brokers that are not featured here, we would recommend taking a look at our category of the brokers that offers ECN trading. This page gets frequent updates so you can see the most recent broker reviews and pick up the best broker for yourself.
Pseudo ECN vs True ECN Forex Brokers
It is quite hard to differentiate a true ECN Forex Broker from the one that pretends to offer its services via ECN connection. As a rule, investment into ECN is quite heavy, this is why there is only a limited amount of brokers offering real ECN Accounts. Unfortunately, there are far more brokers that pretend to be ECN, while in fact they are simply supplying you with an STP connections. Even though STP Brokers are not bad at all, they are still not ECN and claiming that they are True ECN brokers puts them into quite a dishonest position.
What is an attribute of a True ECN FX Broker?
ECN accounts are also known as the ones that provide you with market and exchange types of execution. In other words, with ECN a broker sends your order directly to the market, allowing not only the market players that are connected to the same liquidity provider to be a counter-party in your trading, but it also lets traders of the same broker to simply exchange their orders. In other words, if I am a client of FxPro and I currently have 100,000 USD of EUR/USD long, and I would like to get rid of this position…I can simply get rid of it by selling it to someone who is currently looking to acquire a EUR/USD worth 100,000 USD short.
In general, a broker needs to connect a number of prime brokers and other liquidity providers to its ECN pricing engine, invest heavily in the servers and constantly optimise the system in order to supply Best True ECN execution.
What are the features of Pseudo ECN?
Unlike True ECN, Pseudo ECN is simply an imitation of the ECN. Usually brokers supply you with a regular STP account that has no dealing desk attached to it, and as a marketing gig, such brokers give their connection ECN or True ECN name. It is also common to see ECN in the names of the account. In other words, Pseudo ECN is not different from STP.
How to understand if my broker is not True ECN?
The simplest way is to judge by the size of the broker. As we already mentioned, True ECN execution actually requires a substantial investment, hence if you broker is rather a small / medium player on the retail FX market – it is most probably not ECN. Next to the broker’s size, you can take a look at the spreads. There is no way an ECN broker would supply you with the spreads that do not start from 0 pips. In other words. if the spreads tend to be 0.5 pips on average and you actually never seen a spread of 0 pips – your broker is not offering true ECN.
How do ECN Brokers make money?
This is a rather simple answer – commissions. Whenever you are trading on a real ECN, there always will be a commission attached to your trading, depending on a broker this commission is usually from 5 USD to 12 USD per 100,000 USD of the volume per side. If there is not commission attached to your ECN account – this is not a real ECN. A broker may of course place a certain mark up on its ECN spreads, but this is usually a rare practice. The majority of the True ECN FX brokers simply adds a commission per each side of the trade and this way it makes money.