How to choose a true ECN broker?
ECN brokers offer a few features and services that traders can easily learn about. Before trading, you must know the difference between true ECN brokers and other brokers. A true ECN broker offers anonymity, less commission, tight bid and sell spreads, and fees per trade.
This article will discuss an ECN broker, how to define a true ECN broker, and some tips for choosing one. We will also list the top three ECN brokers.
The top three true ECN brokers are listed below by the Traders Union:
RoboForex ECN Account
Exness Group ECN Account
IC Markets ECN Account
What is an ECN?
An ECN (Electronic Communication Network) broker is a broker that offers ECN accounts. It is an excellent technology with low trading charges on the open market.
This technology is perfect for traders who want to participate more actively during trading hours. It can also help people who want more variety in their investments because it offers lower commission rates and tighter spreads.
ECN provides traders with direct access to other currency and stock market participants as a broker. An ECN broker often gives traders tighter (ask or bid) spreads since it consolidates price quotes from various market participants. ECN includes an electronic communication system for both the seller and the buyer. It does this by offering the necessary order information and controlling their execution. The system is designed to match the exchange's current sell and purchase orders.
How to define a true ECN broker?
It can be hard to find a true ECN broker, so the Traders Union has given a few tips below that define a real ECN broker.
Fees per trade
ECN brokers charge you fees per trade. This means that the more trades you execute, the more fees you pay. This is the reason ECN brokers are interested in your success.
Quicker trade execution
You cannot afford to wait a long time for your trades to be completed when trading. That is why ECN brokers are so efficient; they ensure that your transaction is executed quickly and smoothly. This is done by letting you trade with other people directly instead of through the broker's network.
Low commissions
A true ECN broker usually charges low commissions from $2 to $4 per lot. This is because there is no middleman when trading with ECN brokers. ECN brokers connect to various people in the market, like banks, other institutions, and traders.
Tighter spreads
A true ECN broker has tighter ask and bid spreads from 0.1 pips. A non-ECN broker will usually have wider spreads from 0.5 pips.
Less educational support
A true ECN broker doesn't have good educational support and resources for its traders. ECN brokers are not very beginner-friendly, as inexperienced and new traders will find it difficult to learn through ECN.
How to choose an ECN broker?
After identifying an ECN broker, you'll need to know how to choose the best ECN broker. The Traders Union has mentioned a few tips below.
Fees
The best ECN broker will have the lowest commissions and fees per trade from $2 per standard lot. Low commissions and fees per trade mean your profit ratio will not decrease much.
Regulation and location
Before choosing an ECN broker, check whether the broker is regulated and licensed. Further, look for the broker's location, where it is licensed. A broker with a good county license (for instance UK, US, Australia, some EU country) is better.
Security
The security and anonymity of traders matter most. Investigate the broker and select the one that offers the best security protocol to its traders.
Currency pairs offered
The best ECN broker lets traders trade in different currency pairs to spread out their investments. Choose a broker offering a variety of currency pairs.
Your trading styles
Many ECN brokers offer a demo account on their platform. You can use the demo account feature to get familiar with the platform's trading style. You can select a broker who matches your trading style.
Top 3 true ECN brokers
The top three true ECN brokers are listed below by the Traders Union:
RoboForex ECN Account
Exness Group ECN Account
IC Markets ECN Account
RoboForex ECN account
RoboForex is a leading Forex and CFD broker that offers a wide range of earning options. Inexperienced traders can automatically copy the indications of experienced traders. The broker offers a Forex bot builder for skilled traders and individuals trading in the Forex, stock, and cryptocurrency markets.
The broker provides trading access to over 8,700 trading assets. The spread is used as the broker's commission in the CFD market. The Forex market commission is determined by the account chosen. The normal spread is 0.3 pips, with a trading cost of $1-$2 per lot for an ECN account.
Exness Group ECN account
The broker is the market leader in Forex ratings. The monthly trading turnover of the company is $325.8 billion. The broker provides CFDs on Bitcoin, equities, over 120 currency pairings, energy, and metals.
Exness provides traders with beneficial working conditions, such as low commissions, quick order execution, and money withdrawal. There are numerous options for opening an account, depending on the trader's interests.
A demo account, which functions as a training account, is provided. Exness charges a standard account EUR/USD average spread of 1 pips and an ECN/STP account fee of $3.5 per lot.
IC Markets ECN account
In 2007, IC Markets Trading Company was founded in Sydney, Australia. The broker has an Australian Financial Services License (AFSL) from the Australian Securities and Investment Commission (ASIC).
The broker is also a member of the Australian Financial Complaints Authority (AFCA), a governing body that establishes industry standards for addressing complaints between clients and financial service providers and performs regular audits.
It provides 60 currency pairs, futures, and CFDs on indices, commodities, metals, stocks, and bonds. IC Markets offers free standard accounts. The EUR/USD standard account spread is 0.8 pips, while the raw account spread is close to 0.1 pips. Raw accounts are also subject to a fee of $3.5 per lot.
FAQ
Is Exness a true ECN broker?
Yes. Exness Group ECN Account is a true ECN broker with low commission, easy withdrawal, trade execution, and 120 currency pairs.
Is XM an ECN broker?
Yes, XM is an ECN broker with regulations from CySEC, ASIC, and the IFSC.
What is an ECN account?
An ECN account provides a true matching order execution system, with the broker charging a fee on each trade. It differs from traditional trading, where the raw spreads are artificially inflated.
How to choose the best ECN broker?
Here are the essential tips for choosing the best ECN broker:
Regulation and location
Security
Commission and fees
Your trading style
Currency pairs offered
Do ECN brokers charge a fee?
ECN brokers charge per lot. The more trades you execute, the more fees you pay.
Glossary for novice traders
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1
Broker
A broker is a legal entity or individual that performs as an intermediary when making trades in the financial markets. Private investors cannot trade without a broker, since only brokers can execute trades on the exchanges.
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2
ECN
An ECN, or Electronic Communication Network, is a technology that connects traders directly to market participants, facilitating transparent and direct access to financial markets.
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3
Trading
Trading involves the act of buying and selling financial assets like stocks, currencies, or commodities with the intention of profiting from market price fluctuations. Traders employ various strategies, analysis techniques, and risk management practices to make informed decisions and optimize their chances of success in the financial markets.
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4
CFD
CFD is a contract between an investor/trader and seller that demonstrates that the trader will need to pay the price difference between the current value of the asset and its value at the time of contract to the seller.
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5
Cryptocurrency
Cryptocurrency is a type of digital or virtual currency that relies on cryptography for security. Unlike traditional currencies issued by governments (fiat currencies), cryptocurrencies operate on decentralized networks, typically based on blockchain technology.
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Team that worked on the article
Alamin Morshed is a contributor at Traders Union. He specializes in writing articles for businesses who want to improve their Google search rankings to compete with their competition.
Dr. BJ Johnson is a PhD in English Language and an editor with over 15 years of experience. He earned his degree in English Language in the U.S and the UK. In 2020, Dr. Johnson joined the Traders Union team. Since then, he has created over 100 exclusive articles and edited over 300 articles of other authors.