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Monday, 25 June 2012

ECN Forex Brokers

ECN is the abbreviation for Electronic Communications Network. ECN Forex broker is therefore a special type of forex broker that additionally allow several different clients' orders to interact with each other. The interaction is very significant and has proved very beneficial for most forex traders. This way, these brokers offers special marketplace allowing different participants to trade against each other directly. Apart from allowing different clients' orders to interact, the ECN Forex Broker shares other features in common with other type's forex of brokers.

Features Of ECN Forex Broker:

# Depth of market display

This feature does not allow the dealer platforms to display the available market liquidity. It only allows the FXCC to show volume which are available at best bid and offer.

# Anonymity

They allow anonymity on dealer platforms. The dealer thus knows exactly your trading style and tactics, open positions. He can also use the information provided for his personal advantage.

# Trading during economic releases

This actually allows all traders irrespective if the size of their trade to execute trades and also place new orders within key economic releases. Usually bid/offer spreads gets wider during economic releases, and during unusual market volatility.

# Client-To-Bank Trading

ECN Forex Broker allows client-to-bank trading on the FXCC ECN so you can trade instantly using prices which are streamed by leading FX banks.


Using ECN Broker To Benefit Your Trading:

# Anonymity of your trades

These types of forex brokers use anonymous transactions when buying and selling. Trading through ECN ensures that all your trades and account identity not released hence you cannot be traced. Most traders like this protection of privacy hence would choose ECN brokers.

# Ability to be your own market maker

With the ECN Forex Broker you have everything it takes to be your own market maker. You can ultimately make your own market or simply act as a market maker when using these brokers. They allow you to place an order just between the bids and ask spread.

# High price volatility

Prices used on ECN are not fixed. You can experience several large price swings in a short time especially during volatile trading periods. You can claim quick large profits during these volatile times if you are a scalpers or short term trader.

# Improved execution of trades

They are designed to provide the most improved and advanced trades execution. Understand that you're not in any case trading directly with your ECN broker but simply using the network that they provide. The network is solely focused on matching up all the orders while the opposite side is held by a different market participant.

# News and Event Trading

This type of trading is very ideal for news and event trading. This is very useful when the market is become extremely volatile. You have access to many institutional liquidity providers in the market. This also allows you to get orders successfully filled even in very volatile situations.

# During highly active trading periods you are not tied to spreads

With ECN, spreads are not fixed hence you will not be tied during highly active trading periods. Every currency pair display continuously varying spread depending on the actual volume traded. This also depends on the available liquidity that can effectively support the trade. This is because the ECN broker usually gets their pricing feeds from different multiple institutional markets.


Pros and Cons of ECN Forex Broker


Pros:
  • All the transaction are carried out over-the-counter (OTC) worldwide.
  • ECNs provide currency prices from different market participants like banks and market makers
  • They use the best bid/ask quotes they can afford to offer basing on these prices
  • They show decreased risks of price manipulation since they don't determine prices
Cons:
  • The exchange rate of any currency pair can differ significantly because the system is decentralized
  • They enforce forex traders to pay commissions for each transaction
  • They use variable spreads between bid/ask prices so calculating stops in advance is harder

Conclusion


Due to their great connectivity features, ECN Forex Brokers are the best choice that you should choose if you want to be successful with forex trading. Besides the free interaction between client orders, these brokers offer a wealth of other features that make your trades hassle-free.

Every trader can benefits from low spread and a true ECN account complemented with DOM data is the best way to achieve it. You can go to on www.fxbuild.com and check out another good recommended ECN broker.

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